Would You Buy This Hidden Gem?

Have you ever come across the hidden gem articles suggesting to you that you should invest in a stock?

I have. :)

I have always asked myself that if ever there's this hidden gem in the market or if ever there's this EXTREMELY undervalue stock in the market, why is the person sharing such an info PUBLICLY to everyone. For the minute, they advertise the stock, surely the stock would go up and the hidden gem won't be hidden no more and the EXTREMELY undervalued stock would most likely not stay undervalued any more.

This morning I would like to examine on what happens if one buys a so-called hidden gem and I do actually have one real live example.

What do I mean by real live? Well back in Jan 2008 I made a posting highlighting a news article publishing a hidden gem.

The stock was trading at 8.30. It went up a cool 50 sen after the article was published. LOL!

See how profitable it is to share and publish your hidden gems to others! Let them chase the stock!

Let me call the stock xyz and let me reproduce the chart of the stock when I highlighted the hidden gem stock back in Jan 2008.

What was incredible was the news article called the stock a laggard in its sector but based on the chart above, I was so dumbfounded to read that the stock was branded as a laggard.

Let's fast forward to November 2008.

Could you guess what happens next if a reader decides to take a plunge in this hidden gem?

LOL!

Yeah, me bad. Bad me. Yeah, it does not take much a genius to guess that what comes out of me isn't really a tip and most probably this stock probably tanked since Jan 2008. LOL! Guilty as charged! :P

Some would highlight the recent crash as a reason for the stock dismal performance.

Spot on. :D

By Nov 2008, the stock traded as low as 4.45.

How?

If one had purchased the stock at 8.30 in January 2008, as suggested by the news article, one was at staring at 4.45 for their hidden gem!

How?

Buy more?

Would you buy more?

Yeah, some say that as long as one's reasoning is correct, one should not be afraid to hold for the long term.

That's so true.

But what if one's reasoning is flawed?

Not possible?

Not remotely possible?

And of course the cynic would be extremely quick to point out the bare fact that by using 'hold for the longer term' strategy back in November 2008, one is merely finding an excuse to justify their wrong reason to purchase. Hey, didn't one NOT buy the stock, just because it was tauted a hidden gem? Not true? And didn't one buy the stock despite the fact the stock was already soaring sky high? (I believe some call this as chasing the stock!)

How?

It's now December 2009.

How do you think the stock perform since then?

The stock closed yesterday at 7.40.

Yes, like most stocks, this stock has recovered since its plunge last year.

But it's still below where the stock was taunted as a hidden gem.

Oh.. silly me. I have forgotten to mention the stock name. LOL!

Here's the screenshot of the news article.


And this was my posting dated January 2008: Hidden Gem In The Plantation Sector. ( Link to Star Business article: Chin Teck a hidden gem among plantation stocks)

The following point stood out rather sorely.

• A brokerage in a report said Chin Teck’s operating efficiency was on par with some of its larger peers and it enjoyed one of the highest profit margins in the sector.

As mentioned in the posting, I said back in Jan 2008. "I wonder... who is the brokerage? And when was the report dated? ( Sometimes, I seriously wonder why our business articles cannot quote or name their sources directly. Why?)"

So who was this brokerage that recommended the stock back then?

Seriously hor.

Think about it for a moment.

If this brokerage is of some 'quality' and if this brokerage had decent reputation, surely the brokerage would have absolutely no problems to state their claim on such a recommendation!

Yeah, if they dared to taunt the stock as such a 'hidden gem', why the need for them to remain hidden also.

Clearly, Chin Teck, the stock had flew sky high, back in January 2008 but yet this unknown brokerage called Chin Teck a hidden gem.

Look at the consequences of such a recommendation.

How?

Now... I seriously wonder... who is the brokerage? And when was the report dated?

So the next hidden gem article that you read, would you just buy because they said it was a 'hidden gem'?

Or would you do your own research and see if the recommendation is justifiable or not?

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ps: do understand that this is not a tipsy! I have no idea if Chin Teck is a gem. So it's best that you stop assuming that this is a stock tipsy from me to you. But if insist to ass-u-me, it's your ass not mine. (LOL! Yeah, I do know that such a disclaimer does not sound too nice. :p3 )