It’s been a while since we’ve seen losses similar to the scale of what happened on 3rd Sept 2020 where NASDAQ tanked almost 5% [1] . It was the largest fall since March [2]. The Fear & Greed Index was at 78 on 2nd Sept 2020 which fell to 58 on 3rd Sept 2020. The Fear & Greed Index is made up of a mixture of Put and Call Options, Junk Bond Demand, Market Momentum, Share Price Strength and various other measures. Back at the March 2020 lows, it was around 1 (Extreme Fear) [3].
From the course of my sharing, you would have known that I’m not a Tesla fan. Don’t get me wrong, I like this company but just not at its current price. To simply gauge its share price by expecting the number of cars it would sell in the future does not float my boat. I wished investing can be so easy. I know there are many great plans / moat / growth stories for Tesla. However, why not buy it when it was 10 times cheaper last year (2019) instead of chasing the bull now? The Tesla story, Elon’s vision is not new. In fact, Tesla’s vision was also made known previously.
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Articles on Tesla often appear with keywords “retail investors” such as “Korea retail investors are holding nearly 1% stake in Tesla” [5]. Recall the all-time favourite quote by Warren Buffett “'Be Fearful When Others Are Greedy and Greedy When Others Are Fearful'”?
Sad to also read articles that mentioned “buying low and selling high is the dumbest advice ever”. I do agree for trading, we need volume, momentum and sometimes the best time to trade is at the current high when it’s on a uptrend. However, in my entire 17 years of investing, I have mostly been buying low selling high such as buying during the sub-prime crash on March 2009 (my portfolio timeline). For the especially strong companies, I resist selling as long as its fundamental didn’t change.
I understand that a stock split is usually good signs for a company. However, there is no fundamental change in the company or its value. An article from the year 1999 (Fortune Magazine) on “stock split mania” >> [8]. Will Tesla continue to break new highs? I don’t know. It’s personal preference not to buy Tesla at the current share price as there are many other stocks out there for me to invest on. No need to limit myself to this company. It’s ok to miss out on this. There are still many fundamentally good companies out there with very strong moat, just that the majority have not pushed the price up.
[9]
Back to the topic on market outlook. I do feel that a correction like this on the overall market is somewhat welcomed so that the eventual bull run will be sustainable. My guess is that it is unlikely we will revisit March 2020 lows again. Most countries are in a better position and more experienced now to manage COVID-19 and my guess is that we could hear good news of a vaccine being developed maybe by end of this year? However, some possible risks remains such as a possible deadlier wave of COVID-19 due to upcoming winter season or other black-swan events outside of COVID-19 that only God knows.
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More from EngineerInvest.com:
“Stock Market & COVID-19” where I cautioned (a month prior to the crash) of the possible market tumble & how to protect your portfolio published Jan 2020
“EngineerInvest.com’s go-to Charts to Determine Market Bottom” The all-time favourite article where I shared how I determined it was time to buy stocks published early April 2020
“10% Dividend Small Cap Stock & a Potential Multibagger” published 16 May 2020. This stock is later sold at more than 40% gain in a month since the post. The transaction was shared in “A 40% Gain Stock (Since our post last month), Recent Trades & “China’s Goldman Sachs”
“Will I buy Ant Group (Alipay) IPO & Spending $600 to Transfer Stocks” My take on the blockbuster Ant Group (previously Ant Financial) IPO published 31 Jul 2020.
“Hunting Tips from "Southeast Asia's Small-cap King, Dr Tan” Thankful to have the “Second Board King of Malaysia” (1998), "Warren Buffett of Asia" (2017) to answer the most commonly asked questions by investors published on 15 Aug 2020.
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Even after this dip, I feel that tech stock is still not cheap. For instance, I won’t be adding on Alibaba shares as the current price is way above my initial buy price at HK$180+. However, not all stocks are expensive, it is the few stocks within the index constituents that are driving the overall index up. If I were to invest, I will focus more towards undervalued stocks that haven’t moved much. Some sectors like financials or COVID-19 hit sectors for example, hotels, transport, insurance, entertainment etc. With COVID-19 being better managed as time goes on, other cyclical COVID-19 hit sectors will start to improve.
Apart from this, it is also necessary to always seek a balanced asset allocation and don’t finish all your bullets at one go. Do set aside some funds for “golden opportunities”. I would like to borrow Dr Tan Chong Koay’s quote to “Never Fully Invest At All Times”.
Usually, my articles are uploaded every fortnightly but I thought that it would be beneficial to readers to share my outlook especially at this point in time. I’m still working on the next article “The Next Big Tech? Also My Top Holding (Part 2)” where I will touch on the other aspects of Ping An Insurance apart from business / story point of view. In the meantime, do check out our previous article “The Next Big Tech? Also My Top Holding (Part 1)” if you haven’t done so!!
Just recently, I’ve received quite a number of queries on a stock that we've shared earlier on. We will be starting a poll on this in our Telegram, do join us 🤓 >> https://t.me/EngineerInvest
By the way, it’s not that bad with the market tanking, we might be able to get Ant Group shares at a bargain if the rout continues after it IPOs.
Updates from Telegram/Facebook page
Here are some of the selected shares (screenshots) from my post on Telegram & Facebook. Do join us to check out our previous and future sharing. If I did any trades, sometimes I will also reveal it in my Telegram / Facebook page such as the one below where I sold a covered call option for INMODE. Do check out the original post in our Telegram / Facebook page for a better resolution.
Not encouraging any trades & my positions might change without notice. Just sharing the stock idea for reference, learning purposes only. Do not follow trade, practise due diligence and do check out our full disclaimer.
Cheers & Great Weekend!!
Disclaimer: Just sharing from experience as I have put my own money into the stock market over the period of 17 years. I am not a Chartered Financial Analyst (CFA) Charterholder and do not have any finance-related qualifications. Please also check out our full disclaimer.
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Reference Links:
1.Profile Pic: https://www.cnbc.com/world/
2.https://www.bloomberg.com/news/articles/2020-09-03/bears-roar-back-sending-tech-shares-tumbling-by-most-since-june
3.https://money.cnn.com/data/fear-and-greed/
4.CNBC
5.https://www.bloomberg.com/news/articles/2020-08-31/tesla-s-largest-investors-now-include-south-korea-retail-traders?srnd=premium-asia
6.Google News
7.Google Trends
8.https://archive.fortune.com/magazines/fortune/fortune_archive/1999/02/01/254402/index.htm
9.https://ifunny.co/picture/the-stars-are-beautiful-tonight-people-who-say-gg-even-KKLWBgbo7