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Friday, 7 April 2017

When a stock that you buy doesn't rise

It could be the case that a stock that you buy doesn't rise despite you being dead sure that it will.   Why is this so?

I read an article (dated 3 April 2017) in the Edge Malaysia by Datuk Tong Kooi Ong in his value investing portfolio which was very enlightening.    The important extracts are listed below:

     "Buying shares is not an exact science.   Usually, in the long term, share prices will reflect the intrinsic value, that is, the sustainable cash-generating ability of its operations. 

      Sometimes though, as outsiders, we must also acknowlege the limitations of our analysis and knowledge.   There could be reasons why share prices persistently underperform, even after the company delivers in terms of earnings.   Perhaps there are reasons that could affect business operations in the future (that are not yet apparent), issues of personalities, and so on.

      Whatever the reason, as an investor, we should be patient - but not indefinitely so."


Very wise words indeed.



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