10 Oct 2020
Is now still a good time to buy in local bank stocks like DBS & OCBC? Thinking of buy in and just leave it for long term. How should I start to buy a local stock? Can anyone guide me? Thanks!
It really depends on what the fundamental reason is for you to buy these bank stocks.
I think it is important to note that majority of investors DO NOT understand that banks are very cyclical companies.
Many investors think that these big banks are defensive stocks. However, if you study and way the business runs and how they generate revenue, you will understand banks are very cyclical. Thus, it is essential to expect poor results during economical downtimes.
Knowing that, investing with the expectation that it might take a longer time to recover as compared to another company, might remind us that these were expected and we have to hold it out.
If the reason you are investing is for dividends and you feel the dividend cut makes the stock very unattractive then may be selling and buying into another better product could be one option.
Of course these are just 2 examples, ultimately weigh in the pros and cons.
Also, I would caution against DCA into an individual asset, no individual asset always goes up.Take Nokia or General electric, previously they had a strong moat but see where their business and stock is today.
DCA works on one asusmption, the asset always goes up over the long run, that works for the index but there is no certainty in an individual asset, also DCA will mean you may be buying at extremely overvalued prices.
Individual assets should be invested based on proper fundamental analysis, intrinsic valuation and technical analysis.
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