Saturday, July 21, 2012

Gtronic Sold, What’s Next?

19th July 2012, I sold out all the Gtronic shares I hold for 1 years plus, at RM1.47. It’s time to study for few more companies to look for other investment opportunity.

I hesitated to sell Gtronic for several times. First time was when it came to RM1.30 and maintain about that level for whole weeks. Then, when the first Greek election turned into a bad news, the whole stock market had a sudden tiny shock, which made Gtronic drop to about RM1.1x. So, I kept it.

Then, after the 2nd Greek election that turned out to be a better news, market got back on track. Gtronic got its volume back and start raising to RM1.30 again. The price fluctuated about this level for about two weeks if not mistaken. (I don’t quite remember about the price because I never track it, I only check when I have spare time.)

And just this Thursday (19th July), I checked the price while having breakfast. It came to RM1.45! Then I checked the trade volume for few days back, and it showed a significant increment. I finally decided, without hesitation, sold all the shares I have.

The reasons behind

I hesitated twice at RM1.30 because in my opinion and from my analysis, the company has its potential to grow, and its PE is not ‘that high’ yet. Although it reached the highest of all time since I bought it, I still kept it because of the good financial fundamental. When it reached RM1.30, the Dividend Yield (DY) was still considered high, which was about 7%. This is high or almost double of the Fixed Deposit in bank. For me, this means that if people is going to save their money and get high interest, they still have chance to buy this stock at this price. Hence, there are still spaces for volume growth.

When it came to RM1.45 on Thursday, the DY dropped to 6.12%. Compared to Fixed Deposit, which is risk 0 saving, 6.12% isn’t much better than it. So, probably at this price, people is not going to buy it just to save their money for interest.

Moreover, I checked the trade volume. Within that few days before Thursday, the volume increased tremendously. I don’t learn about technical analysis (TA), so I don’t know how to calculate the moving average or anything. But, my sense of this tremendous increase gave me a strong signal that: More people is going to buy it and expecting it to grow further. Many people is no longer fear of the price since it increased for the past few days. That’s the trend they saw and they followed. And there’s a key quote for investment: When people are fear, we have to be greedy; when people are greedy, we have to be fear. This is the one of the reasons I sold it.

Another main reason is, PE is high. It’s PE 14.xx, and reaching 15 soon, which is relatively high among other technology companies. What does it mean? This is showing that the price could be overvalued. Once I asked my brother (who I learn investment from), whether did he keep the share all the time. He denied, and told me that shares that are overvalued should be sold. He did the same way too.

PE is one of the key ratio, other things to consider is the Net Asset Value from the financial report, which is even lower than the price I bought in. But, what I see is the future potential of the company, not just NAV. Hence, checking PE is another straightforward, and the signal is from there.

What if it goes up further?

Don’t care. I don’t expect it to go down immediately once after I sell it, because I’m not God. I guess, perhaps God doesn’t play stock, so He might not know too. jk…

What I care is, I don’t lose my money when people start feeling the price is too high and selling off, then we may observe the price going down gradually.

Don’t be greedy, enough is enough. Even if it goes up further, the range should not be earned by me. Those what doesn’t belong to me will never belong to me. So, I wouldn’t care.

What’s next?

Currently, I am still holding Vitrox. It doesn’t perform good in term of price. Also, I am still observing its financial performance, which is not quite looking good for the last two quarters. The reasons I bought it was mentioned in previous blog. If the next quarter’s result is going to be good, I might add in this stock to average down the price. We’ll see.

After selling Gtronic, I have now extra fund that need to be invested. Otherwise it will never grow. So, what I am going to do in next few days will be analysing more technology companies stock to find out a better company to invest, suitably at this time and this moment.

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