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A Walk in the Park with Cypark Resources Berhad (5184)

Lately, I have been searching for a company which has good profit margins, a business model which is non-conventional (i.e., not manufacturing, banking, plantation, and trading in nature), and resilient to external market shocks. I hope I have found the right company! This week I will be looking at Cypark Resources Berhad (5184). Cypark is a company that is involved with the provision of environmental solutions. It has 4 main business segments which are: 1. Environmental engineering: Provision of nature conservation and environmental improvement services. 2. Landscaping and infrastructure: Provision of landscape services, project management services, and infrastructure development. 3. Maintenance: Provision of specialist maintenance works on leachate treatment plants, landscape services for parks, and maintenance of public amenities. 4. Green technology & renewable energy: Solar panel, biogas, biomass, waste-to-energy, and other renewable energy project

What should investors do during times of uncertainty

Mr Investor has been on hiatus. There have not been any concrete investment opportunities, at least on my horizon. So what have I been doing lately? I have been concentrating on my regular job! lol ... 

Today, I felt like I should write about a topic which resonates strongly with me: What should you do when the markets are behaving unfavorably? The term "behaving unfavorably" means a volatile market, and any gains are wiped-out the following few days. I am sure most investors or traders, after having being exposed to the markets can relate to this.

I have a few suggestions to help investors handle this situation better:

Determine the stage of the stock market
Before even thinking to buy shares, an investor should assess the overall market condition. It is said that timing is everything, and in this respect, this statement is true to its core. I shall share a secret with you on how to determine a good time to enter the markets. Usually, it is impossible to time the markets, no investor can do that accurately and to a tee, unless of course, you are extremely lucky.

I usually split the markets up into 3 phases:

Phase 1: Optimistic Phase

The market is full of exuberance where only positive news are reported daily; the markets rally higher and moves to new highs. There are rarely any negative news, and if any, are usually forgotten the next moment. By then, most novice investors and traders would already been participating in the market. This is a phase where there are gains to be made; however, the potential to make big money is usually limited.

Phase 2: Pessimistic Stage

After a moment of exuberance, the market dulls.  Global events tend to take a turn for the worst. Events such as trade wars, protectionism, irrational presidents, silly national policies, etc., spook the market. Prices begin to retrace and thus, the market begins its descend.

At this point, the market either consolidates or retraces. Any gains made from Phase 1, would have either diminished or wiped out. This is when most investors should NOT DO ANYTHING. Entering the market at this stage is fraught with uncertainties; mistakes at this point may be costly. 

Of all the 3 stages, this is the easiest to identify. Ironically, novices or even some experienced investors get trapped in this stage because identifying turning points can be extremely tricky. 

Phase 3: Recovery Stage
This is potentially the most profitable phase as most gains accrue here. The epithet "buy low, sell high" greatly applies to this phase. To identify this stage, an investor has to be extremely patient. Errors can cause a bundle. 

How I generally identify this stage is a period of 3 consecutive weeks without negative news. Also, be sure to check the technical charts that the market has bottomed out and has formed a base. Once the market starts a bullish move away from the base, it is an indication that the market is turning. Be sure to let the recovery phase persist before deciding to enter the market. It is better to wait for a confirmed trend than to enter when things are still hazy. 

Decide What to Do
One should try to invest during the recovery stage as the risk-reward ratio is the highest. Before committing to the market, its best to take a breather and assess the situation. 

If the market is in the Pessimistic Stage, its best to sit by the sidelines. Unless, of course, an irresistible investment opportunity presents itself, and by all means, you should grab it. If the market is too optimistic, adopt a shorter-term view.  Correspondingly, if the market is recovering, get ready to adopt a longer-term view.


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