Sunday, May 4, 2008

Is it time to buy Stock now?

Recently one of my friend post me the above question through email.  This is  very interesting question, in view of our local stock market is in bull phase since June 2006, come to this year 2008 is nearly two years old. From the past history record, local stock market seem to have the average bull phase of about 2 years. If you would to ask me if now is good time to buy, the answer is Yes and No. Yes - if the price is right! No- if the price is wrong!

Let's look at the top 15 high dividend stock's performance since 2006 and dividend Yield as below:
1) Berjaya TOTO 9.4%
2) Bintulu Port 8.4%
3) Amway 8.3%
4) BAT 7.9%
5) Carlsberg 7.9%
6) JT Intl 7.4%
7) Guiness 7.2%
8) Gamuda 7.1%
9) KFC 6.6%
10) DIGI 6.3%
11) PBB  6.2%
12) Star 6.0%
13) TH PlantationsTH 5.8%
14) Axis REIT AXIS 5.8%
15) Atrium REIT 5.5%

If one were to buy the above 15 stock since 2006, he will have the paper gain of about 25% on average (assume he not yet sell it) and Dividend of 7.5% (which is a lot better than bank's FD). 
Among the top gainer would be Digi, which we notice it's 2006 price was RM12.10, compare to today (Apr 2008) of RM24.20. This is the 100% capital return. The 2nd place would be Public Bank, from RM6.75 to today's RM11.50! A handsome profit of 70%! 
The rest of counters are in the range of 10 to 30% gain, except on stock, Carlsberg, which decline 20%. Hence, overall still gain 32% including dividend. Assume we own all the above 15 stocks, would you going to sell it today and take all the profit now? We are not here to predict the market and we are not in the position to do so as well, since no one can actually predict the market accurately. 

Let's take a broader view of what's happening in world, the crude oil and commodities price are almost at the highest record (including rice price), few countries already feel the heat of this situation. Today's market will get cut short by a number of things, just like what happen in the past. The least expected thing can happen at the wrong time!

Are you afraid of what may going to happen and sell all the stocks you own today?
Or are you waiting for what's going to happen and buy the above stocks at a right price?

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