Perspective Matters

How people invest may vary in their personalities, motivations and attributions for their successes and failures when investing - all of which may affect how and why they invest. One thing does not change though, everyone is here to make money, even when they start it off with losing money.

Case 1: A Chinese retail company, Gome Retail (国美百货, HKG:0493), back in the days open retail shop across China selling various kind of goods and is especially popular with selling cheap cosmetics. It is so cheap that hardly any competitors can beat their price. This company did not focus its mind on profit from the sale, at some point they are selling enough to breakeven - to pay for their sales employees and has no problem selling the rest of the goods at cost price. Amazing is it not? The reason behind this is that their cost of goods is to be paid three to six months after they have received the goods. Their business model is similar to YZJ Shipbldg SGD (BS6.SI) where they use their cash to loan to people. Perfect example of a company making full use of its cashflow. Anyway, you will not see this retailer in China anymore as the payment period now changed majority to upfront payment. It has since transformed itself into a web based e-commerce company.

Case 2: Price war in Indian telecom industry. Similar to price war between Grab & Uber, Indian telecom industry has been experiencing price war until 2019 in order to capture market shares. Both have given us a very clear idea how the race to the bottom will be for everyone. Hint, it is not pretty. Then let's think of the race between countries to negative interest rate. I really felt blessed to be living in South East Asia instead of the western countries.

How does it relate to today's world? With the pandemic disrupting our life, it will be common for companies to be in the red for quarters to come. While everyone is betting on Biotech companies, including me, there is a limit to how high the price of these companies can go.

Example: Medtech (546.SI) at 15x net profit, I believe this could last for another quarter but could the result disappoint us? Possible, just look at companies worldwide ramping up their production capacity. It is another battlefield all together.

Hence, maybe its time we take a look at companies that ultimately survives through this crisis and plan a right entry price and go long term.

Trade of the Day

Its Friday and the market is green. Awesome timing for me to sell into strength.

YZJ Shipbldg SGD (BS6.SI)
Currently queuing at 0.995 to sell, wish me luck. I will then trade it as usual. I love to buy sell companies that I like. If I get struck, I will just hold.

Clearbridge (1H3.SI)
Sold Mectech (546.SI) and bought Clearbridge. Let's see how thing goes.

Disclaimer: Shared opinion on this blog is not to be treated as investment advice to the readers. Please do your own due diligence and consider your financial goals before investing.