Wednesday, December 29, 2010

Noise

The best stock market advice I had the opportunity to read was not a book by Graham, Buffett, or any other big-time stock market guru. It was from this book that I have now forgotten the title of(I will update this entry as to the title via the comments section).

It says "shut yourself off from the noise".

I'm a believer in value investing and to me having media blurt out the next hottest company or trend just does not help in decision making. This of course includes online forums, commentaries, etc; which is to a certain extent helpful, but not always.

That being said, I'd like to mention one particular stock that has been on the receiving end of some very strong selling pressure, AP. Aboitiz Power has been one of the PSE's darlings of the year. YTD it has increased in price by around 250 percent. It has traded from a low of 8.6 to a 52 week high of 36.9. Yesterday, it was traded down to 30.10 and that to me is some cause for concern for some traders. I would be worried in the short-term, but not so much in the long run.

Short term - selling pressure does not seem to be getting any lighter and although as I type down this entry it is trading at green, this can probably be a simple bargain hunting reaction. Another reason is that its phenomenal performance this year has some fund managers and individual stock owner pocketing gains.

Long term - it belongs to one of the most bullish sectors in the PSE, energy. The Philippines has, is, and will be in the foreseeable future; lacking in power generating capacity. Another reason is that the fundamentals speak of a still-cheap stock. Put these two reasons together and as a friend of mine said last night "You can't keep a good stock down".

So what would I do? I would sell part of my AP and hold it in cash, just so if it trades lower, I would be in a better position to buy. But then, that's just me.

Comments are greatly appreciated guys! Put them down!

5 comments:

  1. nice site, pretzel, u opine like a pro, i was surprised u r a bjj instructor. stumbled on ur site via guscosio where i posted a comment but was not published. would u know a reason why not? ap and dmc are my core holdings and im not keen on telcos.

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  2. @anonymous:

    Thanks! That's quite a compliment, being a bjj instructor is not exactly a full time job, it was a hobby/occupation before i started doing what I do today. I believe its got something to do with the server, it happens to me quite a bit when I try to post something on Mr. Cosio's blog.

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  3. This is what I'm doing. Shut myself from noise, and all stock related stuff for the holidays.. But I still find noise good. We just have to be selective when and what we want to follow. And ofcourse, trust our own research instead of others - or do more research on top of others..

    I've been thinking of getting AP for some time now but I guess cash will serve me best in the next few weeks/months. But ill dfinitely grab some AP when the price is right for me, i just need to keep myself updated on its price.

    Nice new blog nrms! Happy 2011, may we be rewarded with great gains ds yr. YO.

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  4. @x_factor
    thanks ken! happy new year! how was france?

    AP will be a good stock to buy for as long as its priced this cheap. It has been continuously rated a buy/overweight by numerous brokers including ATR, First Metro, JP, etc... I think this stock has some way to go considering one of the PHL greatest problems is a chronic shortage of power capacity.

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