Before one considers trading or investing in a particular counter, it is important to look up information about the company. The recent fiasco in Asiasons Capital, Blumont and LionGold might have been avoided if traders took a step back and reviewed key financial data of each company before taking actions.
With the Internet, there is no dearth of information of any listed companies in Singapore. I went to search these companies in Bloomberg and Reuters websites. These websites provide information such as current Price-to-Earnings ratio (trailing 12 months), Price-to-Book ratio (most recent quarter), 52-week high and 52-week low share prices, earnings per share, etc.
If a particular counter overshoots the industry norms of such ratios (e.g. Price-to-earnings, Price-to-book), alarm bells should sound.
For retail investors who went in to buy and sell a counter on advice of remisiers/dealers because they have no access to such information or ignorant of financial ratios, it is my view that remisiers/dealers owe a duty to inform them of such information. Some of them may not have that kind of money to lose.
Of course there were investors who still continue to trade despite information were provided, out of greed. Making fast bucks is just too tempting to miss out. Woe to those who went in late in the game and left holding a very expensive stock and were not able to exit before the collapse in the share price. They are left holding the problem while others before him had already made their money while the irrational euphoria was at its peak.
It reminded me of a saying by Chuck Prince, former Citigroup Chief:
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance.” The music stopped.
Copyright © 2013, limkimtong for Living Investment
The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.