Speculative stocks

Thursday, July 20, 2006
Market Talk: Speculative stocks

DJ MARKET TALK: Speculative Stks Hammered; May Fall Further - 2006-07-20 07:29:00.0
1529 [Dow Jones] Speculative issues and stocks usually associated with syndicates sharply lower; Iris (0010.KU) down 29% at 71 sen with 108.7 million shares traded, Poly Tower (7175.KU) down 16.8% at 86.5 sen, Sugar Bun (7036.KU) down 8.6% at 96 sen. "It looks like the syndicates used this morning's knee-jerk reaction to distribute their holdings to retail players. There currently does not seem to be much buying support for these stocks," dealer says; adds stocks may fall further.(VGB)
Investssmart: I am not surprised by the hammering at all. It was just a matter of time and the manipulators chose the best time. Dow Jones Industrial Index rose 212 points of 2% overnight and punters would have expected a sharp rise today on Bursa Malaysia. Of course, many rushed into speculative stocks like IRIS early in the morning hoping to get in at a lower price. It should be noted that IRIS rose by 8% to $1.08 this morning before succumbing to strong selling and reached a low of 67c.

The manipulators are not stupid. They cash in when market sentiment is strong and the naive retail investors purchase the shares hoping for a small gain. Has anyone wondered how much IRIS was worth at its peak? There are 914m IRIS shares, 368 IRIS-PA and 55m IRIS-WA on issue. At their peaks of $1.39, $1.28 and $1.17 respectively, the total value of IRIS works out to be $1806m. Was IRIS really ever worth $1.8 billion? It only made a profit of $1.8m in the latest quarter.

Every investor knows that IRIS is a manipulated counter but that did not stop them from purchasing its shares. Bursa Malaysia designated it. Brokers demand cash up front for purchases. News articles comment on it all the time but yet, some people choose to buy the shares, hoping to make some money from it. Who can you blame when they lose money? If someone throws a gold bar into the river and tell you that the river is infested with crocodiles but yet you jump in for the gold bar, who is to blame if you are eaten by the crocs?

The point I am trying to say is "dont try your luck in manipulated stocks". You may earn a little money each time but you could lose it all in just one day. This is an extract from an Australian financial journalist's comments on the share market:

"You need patience. If you try to rush your financial transformation you will fail. Patience is about having realistic expectations. You won't get anywhere trying to make money every day. I've seen people in the market who spend most of the time doing nothing. Just sitting watching things going by. On the lookout. They don't try to generate opportunities out of nothing, they just wait for them."

In conclusion, there is no need to try and earn a little bit of money every day. Even with IRIS at 82.5c, IRIS-PA at 43.5c and IRIS-WA at 38c, it is still way overvalued with a total value of the company at close to $1b. Everyone knows IRIS rose because of the manipulation of its shares. If you are still trying to beat the manipulators to make a profit, please give up because it is almost impossible. In this game, you are the player, the manipulators are the bankers and I don't remember GENTING ever reporting an annual loss. You may beat them once, you may beat them twice or even 10 times but at the end, there is only one winner. And unfortunately, it won't to be the player.

Disclaimer: This report is brought to you by Investssmart, an unlicensed investment adviser. Please exercise your own judgment or seek professional advice from your remisiers. By law, they are the experts. I am not responsible for your investment decisions.

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