Friday, July 5, 2013

Wellcall is no longer in the portfolio

The market continues to rise and today has seen some of the stocks have gone to prices which have reached all time high.

Taking this opportunity, I have decided to sell Wellcall, a stock which has served me well. It is a stock which has its competencies in the area of rubber hose manufacturing (mainly industrial).

Looking at the trend for the past few weeks, after taking a breather for a while, it seems that some of these stocks started to move again. In fact, iCapital's Tan Theng Boo in his small segment in the fourth quarter report feel that the price of Malaysian stocks are so high now that he feels that picking the right stock is as if "finding a needle among the haystacks". One must take heed (at least listen) over a very popular and experience stock picker.

In fact, iCapital has 50% cash in the closed-end fund. A 50% cash holding among the total net asset in ICap is as if the market is to have a major correction.

I am not too sure if that will happen, but to me if it is a major correction on the stock market, it has to be a turnaround (the other way) of more than 20%.

For that to happen, something very bad must have happened to any of the major market players (like China, or US) or Malaysia, at the least, where Bursa is. As in some of my articles, there are some worrying signs (such as consumption credit) but they to me do not warrant a major correction.

I am no economist, but credit quality has to turn bad extensively over a short period of time, banks NPL would have increased substantially, property and related sectors have a major crash or its price dropped at least 15%.

For me, at this moment that is still a tough call as people do not have much places to put their money now as lending to the bank (deposits) is cheap, properties are expensive. Gold? Hmmm...or any other commodities?


K C said...

picking the right stock is as if "finding a needle among the haystacks".

While I also agree that most stock prices have gone up quite a lot and the market in general is no longer cheap, but don't you find the above statement grossly exaggerated?

Holding a third of the total assets in cash for a fund of which the fund manager claims to be a value investor for so many years is already very bad. Since 5 years ago icap, due to the action of its fund manager, its NAV has been under-performing the market. If we talk about share price, icap is even much worse.

After the US sublime housing crisis, weren't there any share worthy of investing for a value investor? I could see tons. come on!

So holding half in cash now to try to time the market again, trying to avoid another black swan event?

If that is the case, why not liquidate the fund now and return all money to shareholders?

David said...

2013 will be the year of high stock prices. I believe the real big drop will be in 2015. The catalyst could be anything, China's credit crunch or even interest rate normalization.

felicity said...

Hi KC, can share any particular stocks that may be worthy of buying or holding?

khengsiong said...

It sounds like TTB is trying to 'time the market'. I'm not sure if this is a good strategy.

ur follower said...

I also lost faith in ttb. He was holding close to 50% cash since 3 years ago. He did not buy any stock since 2011 while you made substantial money since 2011. Ttb is just like 4th prime minister who doesn't want to admit his mistakes and dwell too much on his past success.