August 08, 2022

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3 Years View : To Concerned Rotational / Theme Investors

There have been many talks recent in the market that "export is dead". Some say now is the time of Oil and Gas. Now is time of Construction. Now is time to move on and forget about export altogether. It is toxic. Honestly, I do not know if export is dead. I also do not know if Oil and Gas is back. I do not even know if there is a theme to be played at all as I would readily admit the volatility in the market locally and abroad has shown a completely vague road map ahead. However, what I do know is that there is indeed a sell down of export stocks in the past few weeks as MYR was strengthening and oil price broke $40. 

As long as the counter was export related, regardless of the earnings or fundamentals, there was a complete sell down across the board. Many famous investors' portfolio went into the red. Then, there were many that jump on the  "I told you export counters wont last" and "move to O&G" bandwagon.

Actually, the selldown by retailers / market makers / operators / funds are logical and rational. There is nothing wrong there. However, does it mean to say that export is truly dead? Or that O&G is back? If so, then these people would have missed the boat in this week's rebound in export plays albeit a minor rebound. I think export is not dead. I just think the star is shinning less bright compared to last year. That's all. The fact of the matter is, the market is a dangerous play. Purely relying on themes and rotational play is dangerous. Unless one possess great mastery of TA or have sufficient insights of the movement in funds / institutions / operators, there is no way one can catch the cycle right every single time. 

I am of the view that the move to O&G is cherry picking / bottom fishing. Similarly, I think the sell down on exports counter is a simple case of profit taking. Especially so with the local funds that have supported the sell down as the foreign fund returns to M'sia. This is a simple case of upside vs downside. You can refer to my earlier article on this sometime in January.

Please note that I respect all investment styles and in no way saying one method of investing is better than another. I know that everyone has their own preferred method and that is what makes the market interesting. Diversity. Below is a simple post that I posted for private subscribers and followers. This is for sharing and discussion purposes.

This is because the volatility now is way too great. Can you imagine, the market is now moving so much hand in hand with the FOREX market. So that shows in actual fact there are many more speculators than investors in the market. Which means majority of people have lost money for the past 3 months. I just spoke to some local fund managers yesterday, for your knowledge, currently, the best performing fund in the market is only making 1%. Most funds are underperforming year to date be it unit trust / PRS etc.

My view is this:
1. If you are looking to contra, my advise please stay sidelines.
2. If you can hold 3-6 months, for now it is still export stocks.
3. If you can hold more than 1 year, you can consider O+G, logistics 
4. If you can hold more than 2 years, you can consider textile and apparels,  manufacturing.
5. If you can hold more than 3 years, you should buy property stocks, commodities  

My advise to all is this, don't keep looking at rotational play or theme plays because it is all short term. Additionally, you will lose money more than you win unless you are a Master of TA or Master of Info.

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This  information should not and cannot be construed as or relied on and (for  all intents and purposes) does not constitute financial, investment or  any other form of advice. Any investment involves the taking of  substantial risks, including (but not limited to) complete loss of  capital. Every investor has different strategies, risk tolerances and  time frames. You are advised to perform your own independent checks,  research or study; and you should contact a licensed professional before  making any investment decisions.

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