Hartalega and Supermax announced their quarterly results today, posting record net high profits of RM544.96 million and RM789.52 million respectively. “SELL ON NEWS!” scream investors from the less savory forums. “Aiya you first time play stocks meh? Buy on rumor, sell on news! Everybody also know la!”.
Let us look at this objectively, armed with facts and our superior powers of reasoning.
Say you’re negotiating a big deal with the Sinaloa cartel. The head honcho insists his product is the best cocaine in the whole of Mexico. The purest and sweetest nose candy your sinus will have the pleasure of coming across. 99.999% uncut cocaine hydrochloride from the jungles of Bolivia. It’s beautiful stuff. Would you take him at his word and trust that the carefully packed bricks contain top grade blow instead of the same flour you can find in your grandma’s kitchen cabinet?
Or would you take a few randomly harvested samples and furnish them to your friend Fengtao Fong to partake and review? You’ll expect a typed report – justified, double line spaced, with font size 14 on your table after his binge. As a contingency, you’ll also get the white powder tested with the Mandelin reagent you got from your law enforcement buddy Dirty Dhevan. Deep orange color change? Good.
Back to the main topic, does sell on news work well in investing? It’s an oft repeated truism, but let’s look at what the data says. With all things in life, it’s important to keep a skeptical mind and verify all information with (preferably) your own research. This is good training to develop a more questioning and analytical mind.
What happened to Hartalega’s share price after previous quarterly report announcements?
4th August 2020
This is a classic hammer candlestick. Hartalega’s share price tanked after their quarterly report from a high of 21.2. It has never recovered its lofty heights since.
Sell: 1 Hold: 0
18th May 2020
Hartalega’s share price dipped slightly after the QR and recovered the next day. It also steadily increased in the following days. You’ll have missed the boat had you sold on news.
Sell: 1 Hold: 1
11th February 2020
Hartalega trended up after the QR before retracing slightly. Nothing too serious, perfectly normal stuff. It started rising again after hitting the support before steadily marching to new heights.
Sell: 1 Hold: 2
What happened to Supermax’s share price after previous quarterly report announcements?
10th August 2020
Supermax’s share price dropped after their QR but there was strong buying pressure the next day. At one point it the share price was above the 11.44 it opened at on 10th August 2020. It even reached a high of 12.25! However, that didn’t last and the stock has not seen those peaks since.
Sell: 2 Hold: 2
20th May 2020
Supermax’s share price trended up after the QR release and continued steadily rising to their peak with little retracement. You’ll miss a lot of gains had you sold.
Sell: 2 Hold: 3
25th February 2020
Supermax went up after the QR, retraced, and started ranging before a very strong breakout. There was an opportunity to buy again at a lower price if you sold on news, but that was almost a month down the line! For the sake of this myth, it’s still busted.
Sell: 2 Hold: 4
This brings the total for 2020 to 2 confirmed and 4 busted. In other words, you’ll have missed opportunities 66.7% of the time if you believed in selling on news and only profited from your tenet 33.3% of the time.
El Chapo want to bring you to Holland for a white Christmas. The historical data does not lend credence to the phrase “sell on news”. Flip table, show your dragon tattoo and carefully cultivated long left pinky nail and tell him Malaysia Ah Beng pak beh toh (un-KO-able). Refuse to pay for what is, at best, meth mixed with lidocaine and baby powder.
It’s worthy to note that past performance is not always indicative of future results but smart money says:
The vast majority of the time in 2020, you’ll be worst off had you sold on news vs holding on to the stock.
Make better trades using your fierce intellect, financial gangsters.
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