04 May 2015

Investment Lesson from Misjudgment on Market Trend in 2014~2015: Review – MALAYSIAN BULK CARRIERS BERHAD (5077)

By forecasting Market Trend, investors can position their portfolio accordingly to embrace the coming profits from the coming Market Trend. Again, everything is always easier said than done. After the sharing of Investment Lessons from Unpredictable Events in 2014~2015: PJ DEVELOPMENT HOLDINGS BERHAD(1945), in this post, I am going to share with you about my misjudgment on Market Trend in 2014~2015 - MALAYSIAN BULK CARRIERS BERHAD (5077).

Summary: MALAYSIAN BULK CARRIERS BERHAD (5077) – Bought Average RM1.55, SOLD Average RM1.38, Average Loss ~12%


First, I must admit that I am just a beginner of this kind of investment strategies. The motivation, of course, is its potential profit. The idea is as simple as buy-in when the market is in the worst situation, and then sell out the stock while the market is in its optimal state. Thus, the ability to assess market condition of worst and optimal differentiates the winners and the losers.

My strategy was very straightforward as well. First, go to observe the trend of the Baltic Dry Index. Then, determine the trend from the trend of the Baltic Dry Index and forecast the coming trend.

The lesson I have learnt: However, investment is dynamic. In other words, the strategy that is applicable in the last few years might no longer work because the constants or the assumptions are different.

First, the situation of oversupply is much worse than I can imagine. Besides, it is also unlikely to reach the balance in the next 2~3 years. Even the demand and supply is balanced, this will not directly benefit the existing players. The existing players will only be benefited when the demand is much higher than their supplies in such ways they can have a higher profit margin.

Second, historical price is just a history. In other words, in the future, the market price of a particular object can be lower than its historical lowest price. Thus, there is no indicator can directly guide investors to make investment decisions. Every investment decision should be made based on data from macro to micro, and then from micro to macro.

Action: After doing another comprehensive study from a macro view about the supply-demand in the market, I concluded that the supply-and-demand of this industry was unlikely to reach a balance in nearly future and the Baltic Dry Index was in its downtrend. Thus, I sold out all my Maybulk (5077) with around 12% loss at the price of around RM1.38. This price was the price that rebounded from its lowest of around RM1.04++ in the last few months. Of course, for those who bought in around the lowest price were going to earn quite attractive profits.

That's all for today. In the coming post, I am going to share my experience in NOTION VTEC BERHAD (0083). More fascinating articles and sharing will be updated in Xaivier Blog. So, you are welcome to subscribe our feed to receive our updates.

Written by: Xaivier Chia

P/S: The above sharing is solely based on personal insight and information that believed to be reliable. Your valuable feedback are very welcome.


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