Reader's Questions

My reader said
"Hey there Pehon,

I really like your blogsite, it's really informative and succinct.I'll continue to read from it regularly!Just hope you can maybe give me some advice on Wilmar.

I bought it at $2.82 earlier this month, and currently it's been hovering at about $2.30 to $2.40 on a daily basis. I've invested x amount in it, and I too agree with you about not averaging down. Iresisted the urge even when the price bottomed out at $2.25 just lastweek.

So, in your opinion, following your trading philosophy, whatwould you do? Hold, sell and invest in other things, or buy somemore?

Another share that I've very recently purchased is MMI Holdings. I think it's got very good upside potential, and there has been alot ofinterest in this stock lately. Currently it's already up 4.7%. I'vealso put in x amount in this.Do you think it is wise to sell off whatever I have in Wilmar to invest in MMI as you have suggested in your example you gave aboutStock A & B in your blog?

Cheers,
Reader"

Well, first of all, thank you for your support for the blog.

For the first question, based on my investment model, i would have sold Wilmar at $2.61 if i were you. That would translate to a -7% to -8% loss. At the price you are talking about of $2.40, its already a -14% loss. Its much easier to swallow a -8% loss compared to -14%.

I'm definitely against averaging down, buying or holding your Wilmar anymore. I'll say sell and buy into other shares.

For your portfolio, I would recommend 2 routes.

1. Sell all of Wilmar and invest into other shares.
2. Sell all of Wilmar, and invest in MMI.

I'm aware that most professional analysis houses recommend MMI. However, i've looked into MMI's 1Q2007 results, and I'm going to voice concerns about its QoQ growth.

"Its a single digit growth. I've resonable doubt to say that its not going to sustain its growth achieved in 2006."

Maybe another counter would be better for your cash.

Ps. Refer to disclaimer below.