My family and I went to nearby farms in Lim Chu Kang yesterday during Good Friday holiday, children were excited in finding the Easter eggs hidden in Bollywood Veggies farm. We left Hay Dairies farm around 3pm+ just before the thunderstorm came, never expect the impact of mother nature is so much on farms including Chew’s chicken egg farm (widespread damage), resulting in significant losses. It is important to diversify to at least 10 stocks to minimize the unsystematic risks (business or operation related risks, including thunderstorm yesterday) by 70%, even if a stock may perform well in stock market with support of bullish global market. Don’t put all eggs in 1 basket of golden egg stocks.
Chew’s (listed in SGX: 5SY) is not just a producer of eggs, it is a promotion of healthy life style (eg. eggs with Omega X, etc). For small business such as Chew’s (a young strong-fundamental stock) which may not have a lot of resources, this Level 1 (business level) crisis would take some time for it to recover. If the business just depends on the farm in Singapore, then there is a concentration risk in operation.
There is another regional egg producer which is a super giant stock in Malaysia, which is truly a golden egg stock. The share price has gone up about 5 times in the last 1 decade (a strong growth stock), about 40% rally in share prices in the last 1 year (also a strong short term momentum stock). Ein55 graduates should remember when I shared the best global super giant stocks in the 5-day Ein55 course. If forgotten, you may visit Ein55 Graduate forum under thread of “Investment Opportunities” – “F&B Stocks”. Details will not be shared here as it may be used wrongly if the reader is not trained, may not understand why it is a super giant.
However, for systematic risks such as global financial crisis, it won’t help even if an investor buys 1000 stocks or large indices ETF because Level 4 (global stock market) risks could only be minimized with understanding of Optimism. In general, a smart investor would investing when price is less than value, reflecting by lower optimism. Current global stock market has been at high optimism, stock prices are well above the value, important decision is to sell high for the stocks, converting to cash, so that in near future, there is enough cash which is an important opportunity fund to buy low.
Learn from Dr Tee on how to setup a balance stock portfolio with dream team of 10 “golden egg stocks” in 1 basket, taking good care of these golden egg stocks which could give fortune to us over time.
