Buy and hold is dead?

Buy and hold is dead. I heard people are talking like this a few months back. My opinion is this may be right if you taking a short term perspective. At the current market state, is more easy to trade rather than buy then hold for a long period to realise the "intrinsic value" or "fair value". If you apply trading strategy for last few months, you may sit on handsome profit. People tend to talk louder when they are making good profit. I also have to admit that trading is more appropriate currently. If you traded correctly, making >20% is not a mammoth task, and you are on par with all the investing gurus. There are no reason not to shout about. I have seen enough people or so called "investor" huhaa at bull market but eventually disappear after bear market.

Investing in stock market is a long term business. To survive or making money in stock market is not how much you made in this year alone but consistency of profit you make year after year. All the gurus build their wealth and reputation due to they had achieved a long history of consistent above average profit. Any given year there are sure some "smart alec" is making more money then these gurus, but where are they?

The gurus must sure have some strategy to out last the bull and bear market that is unavoidable. And i am sure that their strategy is not short term oriented, since they are building wealth and furtune over a long duration. I am not against trading, but you have to limit your exposure. Is fine to trade 10-20% of your capital, but dont forget you must also ready for long term cycle of stock market.

To trade or not to trade? Is up to you. Frankly, i spend lesser time in stock market for last couple of months. The reasons are is stock market is high although is not forming bubble yet (my opinion. Contrary to year 2008 the market was traded above 1400. i sold most of my stock) and good buy would not appear now. The other reason is i spend more time in property investment.

Streamline of Portfolio....again

I have streamlined again my stock portfolio. My core holding reduce to Hartalega, Public Bank and Allianz. All my Topglove has been converted to Hartalega and Public Bank. The reasons i did so are nitrile glove is cheaper than latex glove, there may be foundamental change of latex glove producer because high raw latex price. It look like latex glove going to lose its edge. I dont foresee price of commodities going to drop in the offing. This going to hurt latex producers, especially players are not competitive in their price. Although Topglove is still the low cost producer of latex glove, and nitrile glove capacity is still unable to eat big market share from latex glove, but over time it will. Can you imagine that a premium product (nitrile glove) is selling cheaper than non-premium product (latex glove), what going to happen? Hartalega going to enjoy the wide profit margin and demand increase. I consider Hartalega is "able and lucky" as describe by Phlip Fisher. Bullish on it.

In early of year 2009, i converted my LPI to Hartalega. After that both also flying high. However as on today, net profit of Hartalega is more than LPI. Is a matter of time the market capital of Hartalega will outpace LPI. The distintive difference between the two is LPI paying good dividend, Hartalega is growing faster. Which one you prefer is depend on which camp you in.

For same sector comparison, Allianz is making comparative net profit as to LPI, however it is trade at steep discount to LPI. The market capital of Allianz (inclusive if Allianz PA) is aroung 1.4 billion but the market capital of LPI is around 2.5 billion. LPI is paying good dividend but Allianz is going to pay good dividend after settlement of loan from parent company. Again it depend on which you in. (P/S: Allianz is a low liquidity stock)

As for Public Bank, i knew it not going to fly but it still able to grow and paying good dividend. Again is balancing value and growth stock. It still not trading at the reasonable prospective PE (i peg at 16) of a well run business.