January to March of 2014 had almost similar trends to that of 2015. Are trends predictable?
As a matter of fact, if you asked Mr Paul Tudor Jones (with over 2 decades of successful trading history & conceivably one of the best traders in the world),
he would say his partner/chart technician and himself managed to "predict" future market trend time and time again using historical market charts (i.e. comparing the Dow Jones index of a previous decade to the current decade).
Paul Tudor Jones, a biography of what it takes to be one of the only supertrader.
[ http://www.tradinganalysis.com/public/The-Lost-Paul-Tudor-Jones-Video.cfm ]
The point to be made is; Are predictions possible?
If yes, then that person should be the richest man in the world.
Why then would the 3rd richest man in the world (W.Buffett as of 03/2015) amongst others abstain from such an activity?
[ http://www.forbes.com/billionaires/list/#version:static ]
Dr Richard L. Peterson, a psychologist turned hedge fund manager suggests that it is our innate nature to want to predict the future despite knowing the fact that such a thing is (for now) impossible.
Dr Peterson explains in one of his interviews that our brains gets more excited than the brains of a drug addict just prior drugging himself with cocaine equivalents when we anticipate a monetary gain.
In other words, gambling when described as an act of participating to predict the future for a monetary gain, is addictive whether you like it or not.
That being said, it is opined Mr Tudor participated in behavioral finance in that the stock market prices as he saw them were presumed to be the representative of human behaviors that converged into a single representative predictable manic depressive state that is seen as the Dow Jones index, KLCI index, Hang Seng index etc.
In short, it is predictable how market participants will react because in aggregate they represent people behaving as people. When things are good, prices of stocks generally goes up and when things are bad prices tend to go down.
We are thus suggesting in the long run, predictions are possible. Just because people are manic depressive in that we tend to overreact and lose sight of objectives.
[Note: Behavioral Finance is a study core to value investing that is regarded as the polar opposite of Efficient Market Hypothesis]
The mere fact that the term value investing exist and that most successful fund managers accept this line of thought and their above average results when applied accordingly, it is of course the recommended way for all.
However, it is only natural for the stock market to have participants that are divergent in nature for if not there would not exist a market place i.e. if everyone buys and not sell a single stock, there would not be a stock market per say.
All this leads to a fact that in investments, there will be many paths to high returns. However, a research on a particular group of investors that have constantly beaten the averages over the years would inevitably lead to a conclusive method of investing that will probably never find its permanent place in investing. Be glad as aforementioned, only then would you be able to participate in over average returns.
All said and done, the stocks in view are similar from previous months i.e.;
Guiness Anchor Berhad
- good dividend yield, inelastic demand products, high counterfeit products having government enforcement backing
Berjaya Sports Toto Berhad
- good dividend yield, inelastic demand products,
Oldtown Berhad
- overall good business, high competition industry
Parkson Holdings Berhad
- a high probability turnaround story
[Side note]
Interest rates, one of the major factors that affect financial assets, should be given more attention as of late complimenting a bottoms up approach to investment (value investing). Many countries have revised their interest rates lower which usually inflates financial assets (suggested to be good i.e. previously cheaper Japan and UK stocks).
However, with currency fluctuations factored in and the U.S. rate hike speculations, investing in businesses with higher regard to country specifics is recommended.
In conclusion, happy investing in lieu of speculation.
