In what was possibly the worst week of my working career, there were many lessons which I learnt. 1) That there will always be people who do not have basic respect for other fellow human beings. 2) There will always be people who only look for you when they need your help. 3) The market is always poor in terms of interpreting news, sensationalised ones especially.
In my previous post last week, I stated very clearly that the market was wrong in their assessment of the Goldman news. Goldman was just a scapegoat to justify the need for further financial reforms. Politics is indeed dirty. If they really wanted to charge Goldman, they would not have informed Goldman that they were going to sue them 9 months before they did so. The markets have more than fully recovered to their highs in the US and there seems to be nothing that will stand in the way of the way up.
This week, shipping and shipbuilding was the hot sector, with the news of Yangzijiang buying into Bakertech's shipbuiding arm. Rickmers Maritime trust also revealed good news in the form of cancellation of their commitments on their ship orders. Rickmer's announcement is a clear indication that shipbuilders have not come out of the clear from their troubles as yet. However, the market tends to look forward and price in recovery before the actual recovery occurs.
The loser sector was once again Chinese property sector, with the likes of Yanlord, Capitaland, Capital Mall Asia getting hit. Prices of chinese properties are still rising strongly, from last month's data, the chinese are still wiping up properties as if they are free. Once again, it shows the market's tendency to price in weakness before the actual event happens.
What does all these mean for investors? In order to be successful, we all need to be able to see things before they happen. I am not saying a crystal ball is available on the shelves for us to buy, but if we pay enough attention to the signs around us, we will be able to spot trends before they actually happen.
Take for example, one thing I can see for this moment is the resurgence of tech stocks. In Singapore, we have seen the likes of Sunningdale tech, Ellipsiz, Huan Hsin etc doing particularly well last week. I would like to add my weight behind them, to say that technology stocks will outperform that of other sectors going forward. In fact, I feel that this is just the beginning of the technology rally. People who know me will know that I have been anti tech stocks for the longest time because I do not really like the heavy capital expenditure and erratic profits. That does not mean that I do not know how to see a trend in tech before it happens.
If we look at the profit turnarounds in the likes of Huan Hsin, we can see the V shape recovery is firmly entrenched with technology counters in Singapore. I am currently looking for undervalued tech shares not just in Singapore but also elsewhere. I have looked at the tech related mutual funds and I realised that there has not been many global technology funds launched in the last 10 years. As many people should know how I invest. I love to look at unloved stocks, that is where most money can be made. Technology and internet related stocks have been most unloved in Asia, thus this is my latest sector pick. If the funds are not looking at it, that means there will be a lot of rich pickings for retail investors in this sector.
Basically, I always believe is loving the unloved. Contrarian investing? No its not. Contrarian is buying something that is on the downward trend, that may lead to catching a falling knife, thus the risk is high. I will coin this my way of investing. Unloved investing. That is investing in stocks that do not see much love from investors but still delivering profits. That is where you will end up buying a stock below its intrinsic value and lowering your margin of error.
This is what I do best. Looking for companies that are below the radar of investors while having consistent earnings. I have done well using this unloved investing strategy and I hope that you will also learn how to profit from it as I have done over the years.
Stay tuned, I will be identifying tech or internet related stocks to buy, over the next few weeks.
Best,
SVI
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