Many financial advisors like to say that investor should not attempt to time the market. I do not disagree on this point but then again, there are times investor should really avoid investing in the stock market, especially during bull-runs. Then, there are times investors should enter the stock market because of the abundance of bargains. Entering the stock market at the wrong time and choosing the wrong stock to invest in without circle of competence can potentially damage your financial portfolio. It can even ruin your wealth. Let’s take a look at Keppel Corporation and review whether it is worth investing in it now.
Investors who bought Keppel Corporation shares in 2007 and hold them till now will be staring at massive paper losses. This is because they would have bought at a high of $12.00 to $13.00 per share and now the share price is languishing at $5.00. Expect the counter to drop even further after ex-dividend in April. Just imagine, from a high of $13.00 to $5.00 per share.
Even if loyal investors factor in the dividends paid out between these period, they would be suffering a paper loss of at least $4.00 per share. Cutting loss at this juncture for this group of investors may not be viable because the realized losses might be too huge for them to sustain. The sensible way for this group of people would be to hold their shares. However, it is still unclear when this storm will be over and as the oil crisis start unfolding, investors of Keppel Corporation may be facing a long winter.
The picture is totally different for those group of smart investors who bought Keppel Corporation shares a year later in 2008. That was during the Great Financial Crisis and investors who bought the shares would be laughing all the way to the bank. This is because they would have bought the shares at $3.40 per share. If they decided to cash in now and sell their shares, they would have made at least $5.60 per share if the dividends are included.
So it is a good time to buy Keppel Corporation or will the share price drops further? I don’t have an answer for it because I don’t work in the oil and gas industry, henceforth I do not possess the circle of competence. Having the industrial experience is important because investors would have the knowledge on how the sector works and what is the outlook. That is why I generally avoid investing in the oil and gas sector because I know that there are a lot of external factors that may influence the share prices’ movements.
Investors of Keppel Corporation should also be cautious as the Big Boys, the so-called whales has been short selling this counter on a daily basis for at least the past 6 months. It could even be earlier than 6 months ago because I don’t monitor this stock. The information can be verified in SGX’s website. Whilst it is perfectly normal for a blue chip to be shorted by the big guns, it is definitely not business as usual when the counter is being shorted on a daily basis for such a long period of time. Whatever the case, it is important not to be in the running track of the Big Boys because you may be injured by them.
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