Recent action after BREXIT- Sold Frasers Centrepoint Trust

Hello there!

It has been such a long time since I have blogged. Apologies, as I have not made any move in the stock market recently until Brexit happened.

The market fell last Friday (24.06.2016) and a strong rally happened so much so that I was thinking "Have the markets gone crazy or what???!"

Frasers Centrepoint Trust reached its 52 week high of $2.12 and I sold it off immediately.

I have blogged before on when you should sell a stock here and I was rather convinced that it might be overpriced.

I like the saying "A bird in the hand is worth 2 in the bushes". In this case, since I have made a 10% gain over the year, I quickly sold off the stock.

Will repurchase when the market comes to its senses again :)

When should you sell a stock?

The market has been bullish these 2 weeks.

I would like to maximize my profits, sell at the peak (hopefully) and repurchase when the stock is low. However, to time the market is very difficult and I do not encourage that too.

But there are still some very valid reasons on when I sell my stock.

1. When it is very likely (i.e. beyond a reasonable doubt) that the stock is overvalued.

A P/E ratio that is ridiculously high or a very bullish stock that keeps going up within a short period(a few days) without any significant company news can indicate that the stock is being driven by speculators.

I monitor the stock market every hourly x8 hours x 5 days a week x 12 months a year, and so far it has been 1 yr 8 months. Really eat too free lol.

There was a time where Q&M irrationally shot up to $1.00 at its peak. The normal trading price was around $0.68-$0.72 over the year.

StarHub traded at its peak of $4.46 when the average over the year was about $4.05-$4.18 before the 4th Telco came in.

For one to see when your stock is overvalued, I think you would really have to know your own stock SO WELL until you know how it might behave according to STI's movements.

There are some technical movements and volatility (we call that 'Beta' in a stock) unique to each stock Some stocks have very high beta (Noble) whereas some stocks are forever so stagnant (Reits). You can only confidently sell your stock if you know it has suddenly behaved irrationally.

2. When its fundamentals have changed

 In 2015, the oil price started to spell trouble and that was a good time to sell oil stocks like Keppel when it was trading at $9+.

In 2015, the announcement of the 4th Telco came and there were already plans for its entry. That was a good time to say goodbye to Starhub and M1 :(

A shift of fundamentals include the overall industry outlook and the company's competitiveness.

3. When you know you have a better opportunity

I sold Capital mall trust when I earned some decent profits then and I believed that at that particular time, it has hit a high. I sold it off and bought Ascendas Reit when I honestly think it was undervalued (at that time).  This is a reason to sell a stock- to purchase a stock that is performing better (hopefully undervalued).

True enough, A-Reit hit a high about 2 months later and I sold it off again. I am still pessimistic about the market especially in the US side. I highly believe that US is heading for a recession this year.

Digress, I do need some funds for my war chest. I do not think that my opportunity cost to hold off a bit later will be that high.

Well, these are just my opinions learnt through several heart aches; I hope I am improving :)

Will I buy stocks now?

Just a very quick Q&A..

1. Why did the STI drop so much this week?

The main reason was due to China' slowdown in economy with China's manufacturing activity falling to the lowest level in 6 years.

2. Are there any signs that China's economy is improving?

No.  As someone working in the Metal commodity industry, I have first hand knowledge of China's metal prices such as in Iron Ore, finished products and scraps. The prices are dropping so much that it is really rather depressing. It is still dropping now and then.. I am afraid that this quarter's performance may even be more dismal.

Chinese construction market is slowing and it has an obvious effect on its metal prices. Working backwards, I can only believe that China is facing a negative demand brought about by a slowing economy. I can see the correlation in China's metal prices and China's economy and China's stock prices and Singapore's economy and Singapore's stock prices..(You get it).

3. Will I buy stocks now?
The short answer is No. I believe that prices have yet to hit rock bottom and metal commodity prices are not showing any sign of improvement.

4. Will I sell my stocks now?
No. Warren Buffet says 'If you can't hold a stock for 10 years, then do not think of holding it for 10 minutes"

My stocks are for long term and I still firmly believe in the companies that I have chosen.

And really, there is no reason why I should be selling at a loss!!

These are really my humble thoughts. Feel free to leave a comment. Thank you!