Over the years, I adopted an approach that
is similar to Graham's “large companies that are out-of favour” tactic. I look at alpha
cyclical companies during their down cycles and I believed that will offer some
margin of safety.
There are many ways of
selecting stocks. Some people use ratios such as PER and P/B. Some people look
at charts, spotting 52 weeks highs and lows. Some look for the highest yields. The list goes on. When I
first started, I felt overwhelmed and didn’t really know what to look for.
I bought into 2 counters, Golden Agri and YZJ, using this approach.
For shipping industry, the Baltic Dry Index (BDI) hit record bottom at 661 last year. The
peak was 11,000. Even if one were to take the average, we can quite safely say the
BDI was nowhere near where it would be mid-cycle. Shipping down
cycle is characterized by a dearth of new shipbuilding orders, collapse of
freight rates, ...
...
