In the bull market of 2002-2007, textile stocks generally were selling at a discount to others most of the time, probably because of the competitive nature of the business and its vulnerability to quota/trade disputes, etc in the international scene. Although there have been no such problems for some time, one cannot be too confident that they will not recur in the near future. Penny stocks, especially S-chips, should best be treated as instruments for making money as falling in love with any of them can be fatal. In the last bear market, no S-chips was spared in the very savage sell down showing that buy-and-hold strategy or Warren Buffet style of investment could be most tragic if adopted here. Managing risks warrants priority attention for survival in the world of S-chips or in penny stock investment. As a way of reducing risks, stocks like Gaoxian, should best be sold off after attaining a certain value (eg. PE of 10x - about 42 cts). The proceeds can then be utilized for switching to another stock with much lower valuation and downside risks. It is a good practice to leave behind any potential gains beyond a PE of 10x or 15x (depending on the type of stock and the stage of the market) to someone with a bigger risk appetite.
Yes, we should not be too affected by the past, Dello. However, we should also not fail to learn from our past experience and mistakes – some lessons are very expensive and painful and are best not repeated.
Below are 3 sayings that I find rather encouraging towards learning –
“Cheat me once, shame on you. Cheat me twice, shame on ME.”
[Application: Learn from past mistakes and avoid making the same mistakes twice.] “For some people, a 10-year experience is just 10 years of ignorance.”
[Application: Learning is a life-long process. Unless one learns and upgrades one’s skill and competency constantly, one may lose out in one’s effectiveness on the job.] "The definition of stupidity is doing the same thing over and over again and expecting different results," said Albert Einstein.
• The stock has fallen to its rising support trend line as well as its 200-day SMA.
We reckon that this support at S$0.225-0.23 is a strong support.
• As volume appears to be tapering off, we think that selling pressure is also
easing. There are also bullish divergences seen on its daily and intra-day
charts.
• Only aggressive traders may opt to get in now to long. A short term rebound
towards its 30-day SMA at S$0.31 is a good possibility. There is also
resistance at S$0.285. Place a stop below S$0.22.
