Thursday, February 02, 2006

Sector Fundamentals 0 comments

(P.S: Sorry for any disturbances the advertisements above may have caused you)
This seems like an opportune time to start a blog on sector fundamentals. The stock market has rallied nicely and there is an increasing number of new retail investors/punters coming into the market, attracted by the gains to be had. The sentiment index is high now, given the non-stop rise of the STI and Sesdaq since the new year (China and oil & gas stocks in particular). It is useful to remind oneself that sentiment flow is a random process which always reverts to the mean, and this mean is systematically driven by fundamentals --- boring stuff such as company revenue, earnings and outlook. Thus it is better to educate oneself on such a systematic component of fundamentals, rather than try to understand the randomness of sentiment.

Nobody can be an expert on multiple sectors simultaneously, says Warren Buffett, and I agree. Of course investors should try to focus on a few sectors that we understand very well, but at the same time I have always believed the investing process is as much a learning journey about various businesses as it is about making money. This blog on industry dynamics and various sector fundamental issues is a knowledge internalisation site for me -- too often information if not analysed and penned down, simply remains unprocessed miscellaneous newsbits that do not contribute to a deeper level of understanding. There will be many times when I just copy and paste useful articles from elsewhere into this site, for my personal documentation and altruistic sharing with readers. :-)

PS: Note that the title naming convention is as follows:
--> Main sector category/Sub-sector/General fundamentals issue
eg. Technology/Contract manufacturing/Demand dynamics




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