We should be optimistic when everyone is pessimistic- ECLAT once again breaking a record high price.
Numerous electronic stocks have horribly plunged after index has crashed, therefore, attracting many tracking rebound traders and analysts. They seen to forget about how had they been tie-up and experienced a big losing caused by tracking rebound earlier. As those who recommended to buy (2454)MTK at the price of NTD 400 dollar, it still seen to be a critical condition with its 60% of price now. About (3037)UNIMICRON, many analysts was saying," it is a great opportunity to buy when the price is down to NTD 30 dollars from NTD 61 dollars." However, as it has fallen to lows of NTD 10.62 dollars now which is only 30% left than before. In another words, many electronic stocks are only in the middle way of long-term stock market crashed. These analysts, with great courage but less expectation, dare to take the risk of 50% only to earn 10 to 15%. What do you think? Is that right?
Let’s take another look from the view of global trend. The Unite States had oppressed Japan for more than 20 years; the conflict between the US and Soviet Union even last nearly 30 years. This can be understand by the oppression and defeat between countries will not end in just few months. At time, the oppression of US toward China is only the beginning of few years. The pressure of China is only a start, however, many analysts already opinionatedly jumped into it. Take a look about SHARP, the panels seller, the price have continually fallen till now since 1980s although many thought there was nothing to lose. Its market value lost almost 99% in twenty years. Is any of Taiwanese well-known electronics factories have the same miserable condition like that? Nevertheless, these analysts who let their guard down making big mistake of tracking rebound only because they saw the stock plummeted.
Then, what is the best way of investing under the situation now? Buying long-term globalization trend stocks. The price of numerous bank stock has crashed down to 2,3 or 5 dollars only after Asian financial crisis in 1998. Meanwhile, the price of electronic stock was still high above, like Foxconn’s lowest price was settled at NTD 115 dollars after crumbled down. Apparently, these bank stocks considered low-cost, but in few years later, their price finally crashed down to cents from few dollars and result unlisted. Even the government have to pay for their lost. People always give excuse when they were buying at the price of 2 or 3 dollars that “the price of these bank stocks were few hundred dollars before." Nowadays, pursuing electronic stock analysts is like investors who bought bank stock at the price of 2 or 3 dollars.
What if they bought Foxconn at its dropped price of nearly NTD 100 dollar, they would earn more than 3 times after a year; buying TSMC at the price settled down in 61 dollars, they would earn even more than 5 times in one year. Emperor Taizong of Tang said, “Look upon history to learn the tide of time." However, the modern analysts are far behind the ancients. I feel pity for the investors. If you trade on tracking rebound of buying electronic stock, unfortunately (the risk might be high) you may have to repeat a failure of buying bank stock before.
Investors should understand during the process of thousands points plummeted, some stocks could not drop 50% or 60% without no reason. It is like (1476) ECLAT still breaking a record high price today for some certain reason. The stock price could not be considered cheap when it dropped. As people looked at Bank of Kaohsiung dropped from 650 to 6 dollars, they thought the price is cheap, but it finally becomes wallpaper; The price of ECLAT has raised from 8 to 100 dollars, many considered expensive, but it keeps rising from 100 to 519 dollars now and still growing. Who said 100 dollars are significantly more expensive?
Therefore, the point is not on the price but the future outlook. Foreign investors keep buying ECLAT because its great future growth perspective. If it would continually grow in the future, the price should be constantly raising. Otherwise, it might go down till unlisted from the market. Therefore, never buy stock because the price have dropped. Of course many might say, " I am only tracking a rebound." However, if one lacks of long-term investment prospective and strategies, this would be a worse idea and might cause big problems. Because if very stocks are worth of buying under the situation of market rebound, the traders would actually face a big and unknown risk. When the stock market volatility spikes, investors are easily to set stop loss or take profit if they do not understand its long-term holding value. Even if buying ECLAT is also useless. You never know the shares you buy will rally hundred times or the company will give you bad cheques tomorrow. It is true!
When I was in charge of Global Investment 20 years ago, I had been sent to an international investment trust and learned from each other with their local investment’s team. My first impression to them was their biggest share holding stock – Pacific K&S. With their biggest reason why they bought it: the long-term patten looks good and the price had plunged low enough. I was shocked when I first heard their saying. “How could they buying stocks like this? " I murmured myself. After that, I was finding excuse not to go there. As my prediction, this stock was unlisted after nearly 6 months. Meanwhile, the record of this international trust soon became the last ranking of that year. It is ridiculous that the most dangerous mistake even could be done by the international trust, but still today almost 80% of analysts are trading like this way.
However, the situation now is attractive for most investors because TAIEX significantly gets tougher in this tough time of continuously bear market. Actually, this could disclose the long-term opportunity as ECLAT once again breaking a record high price which investors should not miss it. However, it is funny that many analysts said textile stock would easily plunged because the base period is way to high. They are again make the same mistake as above. Wasn’t Foxconn earning 1,000 times at time of middle 1990s ? Who says the stock would stop rising after 100 time of boosting? Investors, never forget that is America leading the globalization trend.
The global trend is not as bad as predicted due to China’s economic slowdown. Because the rising of India is taking over the burden of China, and its economic growth has exceeded than China. Some of the Southeast Asia countries have been down because of China, however, they are gradually maintain stability by the particular support of America. Taiwan’s deep negative feeling was because too much depended on China (same as South Korea). Nonetheless, it is a great opportunity for long-term investment while everyone is pessimistic to the market. As the example of our empty single, we should be optimistic when everyone is pessimistic.
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