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Wednesday, July 9, 2008

Blog Capsule: bullbear vs Moolah on PBBANK

The background is we were discussing a rather passionate topic close to our hearts which is Selling.

The primary participants are bullbear vs Moolah. Related participants are myself, dorraidd, and a few others.

bullbear is of the position that for a stock like PBBANK, one would only need to buy and hold forever. He does have a qualification that provided the fundmentals don't deteriorate, and his timing appears to be to wait until there is confirmed deterioration.

In fact, from past discussions, bullbear indicated that he is inspired by his friends who has successfully held stocks for many, many years (the impression given is that it is decades). He also doesn't believe that he can market time successfully. For example, when asked why he didn't sell now, he says he thinks that we are already 2/3rd through the bear market and there is only 1/3rd left to go. He qualifies that he doesn't really know from memory.

bullbear naturally and strongly believe in this Buy and Hold view, and thinks it applies to many other stocks as well, that may range in 100 (?), so long as it meets his requirement. Unfortunately, I don't know exactly his requirement, but I welcome him to comment on it if he wants to elaborate further.

On the other hand, we have Moolah who looks at the situation from a different angle.

From his perspective, there are at least 2 reasons to sell PBBANK today, or as soon as possible.

The reference price is $10.1.

His reasons are: 1. When viewed over the last decade, we are smacked right in the middle of a GLOBAL Bear market. The belief is that bull markets rarely comes to Malaysia (about once every few years or decades), and when the bear starts, they will not immediately stop. The implication is that things will get worse, and PBBANK will be dragged down with the rest of the stocks. 2. The stock suffers a potential risk that it is highly dependent on certain large shareowner and founder still around. Since he is not getting younger even though everyone wants him to live forever, the risks of him leaving gets increasingly higher as he ages.

Hence, this experiment.

Treat this like a Blog Capsule.

Let's open this email again in 2 years time from now to see who is right.

Will it be bullbear - the advocate of Buy and Hold i.e. in 2 years time, PBBANK will be higher than $10.1?

Or will it be Moolah - the advocate that there is a time to sell, and the time around now would seem close. (I think he prefers higher, but he believes deep in his heart that even now, the time is to sell). I.e. in 2 years time, PBBANK will not be significantly higher than $10.1, and more likely to be lower than $10.1?

I guess, in this case, only time will tell, although I of course do have my own opinion ... :-)

Take care.


The Madviruz said...

I am inclined to go along with Moolah. Public Bank or its price is not immuned to crisis in the past and there is no reason to think that it will be for now or the future.

I have punted Public bank in 1985 and held it till July 1987 cleared before the October crash.Then again in 1988 till the first gulf war of 1990. Yet again in 1992 till before the 1994 crash. The same scenario was repeated in 1995 till March 1997 before the tomyam crisis. Everytime the entry was extremely profitable with 2-3x the entry price. To have held it from 1985 to 1998 years, the profit would have been peanuts.

But then that was before Public Bank started their capital management program. I must say then held up well throughout the last few upheavals this last five years. Will it be any different today with the current worldwide crisis still burning? It has made many timely and strategic moves over the last decade. Will it be immuned? I doubt it and I have acted on it as in the past. Definitely not keen to see it shrink.

Kris said...

Yeah..i am also agree with Moolah..No one will be spared once the poala bear hit ..especially Malaysia. It is better to sell now and buy later.

Lets put into a BLOG capsule and let time decide who "assume" correctly.

jasonred79 said...

Cheh. This is a SIMPLE question and answer.

Even for stocks like PBB, if you managed to buy at the bottom and sell at the peak every couple of years, ie you only performed 6 or so transactions in the last 20 years on PBB, you would have easily made more than 40x as much than if you had bought 20 years ago and held on until now.

Those who bought 20 years ago and held until now, though, have still made much more than those who did not buy at all. Or bought poorly managed coys.

And if anyone quotes Buffet and Coca cola, might I remind you that Buffet likes to gain management control of companies he likes, to ENSURE that their fundamentals remain strong? :)

PBB went from RM1 to over RM10... is it likely to go from RM10 to RM100 within our lifetimes? ... Personally, I don't think so...

Moola said...

Ah Seng Kor,

Just for the record, could you record down the interim dividend of 30 sen less tax. This should be recorded as a 'real' lost opportunity - dividends forgone.


investbullbear said...

Jul 1, 2010 11.88 12.32

The price of PBB in July 2010.

investbullbear said...

Buy and hold is safe for selected stocks. Today, the price of PBB is even higher. Add in the dividends, the returns have been good.