If you do not sell, you do not lose money, yet. (better buy low though…)

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The thing about investment is this. We invest and we wait for that investment to appreciate. Assuming we bought a home for own-stay of RM500,000 with a downpayment of RM50,000 and it has appreciated by RM50,000 after 5 years. The return based on a simple calculation would be 100 percent. RM50,000 downpayment and RM50,000 returns. However, it’s after 5 years, so it’s 100 percent divided by 5 years which is 20 percent. Good returns yeah? ONLY if you sell the home. If you continue to stay there, then whatever profit is only on paper.

The same applies to the stock market. We bought stocks, the prices went down and we did not sell. Technically we have not yet lose money but if we need money immediately and sell those stocks, then we will have a loss. It’s not the best of times for the stock market. Individual stocks wise, it’s pretty tough for some of them. Many friends continue to be extremely wary of the stock market and continues to wonder why people want to buy into the stock market since it’s negative currently. Erm… should we buy into the market when it’s booming then? (Bull Market). Well, what has happened in the stock market is that many investors have seen the value of their holdings go down.

Article in themalaysianreserve.com here. RM100 billion loss in market value for just a dozen companies. This is despite many emerging markets stock markets are rising. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) has fallen 272 points or 14% in the past 52 weeks. 12 major companies together have lost over RM101 billion in market valuations over the last one year. Genting Malaysia Bhd has lost a total of RM14.5 billion year on year. CIMB Group Holdings Bhd, Axiata Group Bhd and Telekom Malaysia Bhd (TM) have lost RM12.03 billion, RM12.64 billion and RM12.44 billion respectively in market value in the past one year. Another company with a steep decline is cement manufacturer, Lafarge Malaysia Bhd.It has lost RM3.32 billion from a year ago. Another seven companies which have recorded slight to steep declines in market value include Tenaga Nasional Bhd (-14.42%), Genting Bhd (-26.77%), Astro Malaysia Holdings Bhd (-43.06%), Gamuda Bhd (-41.44%), IOI Properties Group Bhd (-40.46%), SP Setia Bhd (-35.01%) and IJM Corp Bhd (-33.93%). Please refer the full article in themalaysianreserve.com here for more explanation.

Yes, this is definitely a good time to buy some fundamental stocks and keep. Unless we believe that particular company is going to go out of business soon, else weakness in price should be a strength to buy. Courage is needed of course because with prices keep going down, our confidence will be eroded too. If we need any encouragement, this is what a world famous stock guru said. “Price is what you pay; value is what you get.” What this tells us very briefly is that value is something we should have already done our due diligence. Use logic as well please. Price meanwhile is determined by sentiment. So, buy when sentiment is negative because the value of the business does not change… Happy buying.

written on 22 March 2019

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Article written and edited by Charles. News article summarised by Dina Batrisyia.

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