My friend sent a text message yesterday and asked me to check for him why TA stock suddenly dropped drastically. The stock seemed to be doing well, from about 60 sen early this year to the highest of 1.48 just last Monday.
In fact he had bought this stock at a high price of about 2.02 last year well before the financial crash in October 2008 and was caught with his pants down so to speak. He lost a lot. So as a way of recouping some of his losses I advised him to buy more of this stock at the current low price (ringgit cost averaging). He finally did and bought some at 1.26 and sure enough it appreciated in a matter of a few weeks due to the recent "bullish" financial stocks.
Quietly, he sold his newly acquired shares at 1.47 and made a tidy sum. When I found out about this, I told him he was being impatient, he should have waited longer as I was sure he would gain more. He said something about not being greedy... well, what could I say?
Yesterday TA shares dropped to 0.78 and we actually missed the Bursa announcement on 15 Oct that the company would issue dividend in specie. Well what it means is that instead of issuing a cash dividend, this company, likely lacking in cash, has decided to give stock dividends instead, that is like for every five existing shares you hold they might give you an additional three shares, for example. Yes, he now has more shares but the whole value is much lower!
He was grinning cheek to cheek that he had made an earlier decision to sell the stock at 1.47 as , if he were to do it after this dividend in specie, he would have lost nearly 50% of his money. He was glad he did not ask for my "advise"...... well , after all didn't I say I was not trained in finance :D
In fact he had bought this stock at a high price of about 2.02 last year well before the financial crash in October 2008 and was caught with his pants down so to speak. He lost a lot. So as a way of recouping some of his losses I advised him to buy more of this stock at the current low price (ringgit cost averaging). He finally did and bought some at 1.26 and sure enough it appreciated in a matter of a few weeks due to the recent "bullish" financial stocks.
Quietly, he sold his newly acquired shares at 1.47 and made a tidy sum. When I found out about this, I told him he was being impatient, he should have waited longer as I was sure he would gain more. He said something about not being greedy... well, what could I say?
Yesterday TA shares dropped to 0.78 and we actually missed the Bursa announcement on 15 Oct that the company would issue dividend in specie. Well what it means is that instead of issuing a cash dividend, this company, likely lacking in cash, has decided to give stock dividends instead, that is like for every five existing shares you hold they might give you an additional three shares, for example. Yes, he now has more shares but the whole value is much lower!
He was grinning cheek to cheek that he had made an earlier decision to sell the stock at 1.47 as , if he were to do it after this dividend in specie, he would have lost nearly 50% of his money. He was glad he did not ask for my "advise"...... well , after all didn't I say I was not trained in finance :D
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