Political drama and the stock market

Did you stock up on popcorn Super Ring? Political uncertainty triggered by Datuk Seri Anwar Ibrahim’s claim that he has majority support for a new government has resulted in Bursa Malaysia falling yesterday. Some people see this as bad thing and proceed to moan and gripe on social media and investing forums.

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Me? I love declines like these. The announcement of MCO. Political brouhaha. Rise in COVID-19 cases. Yum yum.

These are all very delicious events which allow stocks to be picked up at a discounted price. It’s like loading up your plates on a buffet spread with lobster, Alaskan King Crab legs, and the best sashimi grade salmon and tuna. 😋 This is a huge sign saying 30% off on your favorite counters on KLSE.

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I was very, very busy last night setting orders for stocks I wanted to purchase on the cheap.

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You see, nothing has fundamentally changed about the stock (unless you’re going for politically-affiliated goreng stocks). The balance sheet, profits and valuation are still the same. External factors which affect investor sentiment like political uncertainty are mostly driven by speculation.

I repeat, NOTHING is different about the underlying stock.

People will not stop eating Maggi Mee (NESTLE) just because DSAI is the new PM.

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Toll payments when you drive through LDP (LITRAK) is a fact of commuting in the Klang Valley.

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You will still need to use MyEG’s website (MYEG) to pay for your DBKL summons from that one time you parked beside the road because you needed to use the mamak’s toilet urgently.

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That final example may be a bit wonky though since MYEG (a Najib-linked company) has not recovered since Pakatan Harapan (and later Perikatan National) came into power. Companies that depend on government contracts (or are politically-affiliated) should be approached with caution and after factoring in a possible regime change.

Feel free to rush the buffet table for all other counters, especially established blue-chip stocks! Remember this quote by The Oracle of Omaha himself:

Be fearful when others are greedy and greedy when others are fearful.

Encik Warren Buffet

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