On 28th December 2009, I posted the charts of a few companies that had gone up continuously from the lows of March 2009.
Click
here to see what have happened to these companies since Dec. 2009.
Adventa, Latexx, Latexx WA and HaiO have corrected significantly since the end of 2009. Their prices now are at levels of the end of 2009. The prices of these companies have corrected due to deteriorating fundamentals in their businesses, which maybe temporary but for a prolonged period (as per the glove companies) or permanent (as per the MLM company).
Sime Darby shares dropped precipitously in May 2010 due to reported losses in their business. However, it has since rebounded, almost back to its previous price levels.
As for the other companies,
Petdag, PBB, LPI, GAB, HLBank, QL, KPJ, JobSt, KLK, & IOICorp,, their prices reached new highs in the present bull market.
Lessons derived from the above:
1. Sell when the fundamentals of the companies deteriorate. Often this is evident from one or two quarters of "bad" results, especially in those companies with businesses having no durable competitive advantage.
2. A good company that hits a temporary setback and where its price is sold down may presents a good opportunity to invest. A large established good company is resilient and has the resources to recover.
3. Buying high quality companies at fair or bargain prices, but not overpaying for them, will often turn out to be profitable investments long term.
