I Missed the Train! What Should I Do?

In the mid of September, 2016, one of the most popular blue chips known by the investors, which was Jasa Marga (JSMR), suddenly fell rapidly to 4,500’s, the position was its lowest in the recent year, whereas its fundamental did not have any problem at all (On the semester I of 2016, the income of JSMR grew 44%). And then the reason JSMR could fall rapidly that of the right issue. Then the question, was it a valuable opportunity? And if the answer was yes, then at what price we could buy JSMR?

So, after I had analyzed few matters, then I drew a conclusion that, yup, there was an opportunity lay in JSMR, and the buy price suggested was 4,000 or below. You can read the analysis here, the analysis was published on September 19th, when JSMR was at 4,550. But back then JSMR did not fall to 4,000, but rose instead to near 5,000, which makes peopla talked cynically: Buy JSMR at price below 4,000? To buy at price below 4,500 seems impossible already!

But not long afterward JSMR fell.. below 4,000! More exactly at 3,900 at the end of November, before it rose again to its current position at 4,360. When JSMR was 4,000, then I bought it, and when the article was being written, we still held JSMR.

The question is, when I said that JSMR might fall to 4,000 or below, and it was true that JSMR dropped to that level, then was I able to foresee or predict the future? Well, of course I did not, and in the recent years I have never predicted if a stock would rise or fall.

What we did was estimating what would be the best price to buy a stock, and then waiting for it. If the stock I wanted fell to the ‘best price’, then I would buy it. But if it did not? I would let it go, and I will buy other stocks instead. Back to JSMR we discussed above, if it had never fallen to 4,000, but it stuck at 4,500, I might not have taken the risk of the higher price and picked another stock. But fortunately it dropped to 4,000, finally we bought it. Actually, besides JSMR, there were several shares that I wished their prices would fall to a certain level, for example it was Adhi Karya (ADHI) which might be possible to buy at 2,000, or Gajah Tunggal (GJTL) which was attractive to buy at the price 1,000. And indeed, both ADHI and GJTL had dropped to their best prices, before they rose to their current positions later.

However, not all the stocks I aimed ‘proceed’ to fall to our ideal position to buy. For example it was Bank Jatim (BJTM), I had already prepared to ‘buy’ at 450 or below, because of my experiences, BJTM would skyrocket at the beginning of the year because of its dividend distribution (its yield could reach 10%).

BJTM’s logo, one of the best ‘dividend stocks’ on IDX

But BJTM only dropped to 480, before it rose to the recent position (580). But the most irritating case was that I had already targeted Bukit Asam (PTBA) at the early 2016, which fell below 4,500, but I insisted on buying at 4,000. Unfortunately the lowest position which PTBA reached was 4,165, then we bought nothing.

And then... what is the current position of PTBA?

So, was my decision over JSMR, ADHI, and GJTL accurate, but my analysis of BJTM and PTBA were inccurate? Well, they were not, and once again, it does not matter if you are an expert at analyzing, but no one would predict the movement of a share accurately. Be careful if someone claims that he can foresee the share price in the future.

But when we use the value investing method, we can estimate if the stock price is fair, expensive/overvalued, and cheap/undervalued, the best price for a share is when its price is undervalued. Then, this is what we should do: when we infer that a stock has a good fundamental and is reasonable to buy, we have to decide the buy price. And if its market price is still higher than the price estimated earlier, alias expensive/not undervalued, then we have to sit and wait.

Therefore, any stock will not be valued as expensive forever, but there will always the times when it is valued as fair or cheap, whether when JCI falls, or a certain specific event happens (for example its right issue of JSMR mentioned above). Because determining ‘expensive’, ‘fair’, or ‘cheap’ is a subjective estimation, an investor may assume that stock A at 1,000 is still expensive, but another investor may accept it as cheap, a case often occurs when we have waited long enough, but the stock we aimed never falls to our ideal price.

And if such a case happens then let it go, it means that the opportunity in the stock we targeted is closed, but that is not a problem, since we can turn our attention to another stock which has an open chance. Yup! If JSMR had not dropped to 4,000, and BJTM had fallen to below 450, then I would have chosen BJTM. Although I missed the train on PTBA, I found ‘the train which had not departed yet’ in Harum Energy (HRUM), its price was 1,050, and it brought me huge profit.

The good news is, if you careful in screening ‘the hidden pearl’ on IDX, you will always find an opportunity, though not everyday, to get a good stock at the low price. Then you do not have to be dissapointed when you miss the train as the stock you observed rises before you have the time to buy it, because you can find another stock which ‘has not departed yet’. But if you are in a condition where all good stock is labelled as expensive, it means JCI climbs up high till it bubbles, we have to wait until it drops, and if it occurs then we can buy a lot of good stocks at lower prices.

But indeed, the hardest part is when we have to wait. Although it is mentioned above that there is a chance to get a good stock at the cheap price, but the opportunity does not come up every day, but sometimes. The moment when there is no opportunity, an investor should be patient, but that is it.. After I have become a market participant for several years, I can infer that most stock traders on IDX are not more patient than the motorbike riders who stop at the traffic light of Jakarta when they go home from their work offices.

But when you can be patient, you can sit while you are waiting for ‘the schedule of trains to depart’ and not to pursue the departing train (but most people are like that: They are not attracted to a cheap stock as it ‘does not move’, instead they buy the skyrocketed stock), then trust me, the result will not be disappointing!

Original article was written (in Indonesian Language) in December 10, 2016. For inquiries, please contact the author by email teguh.idx@gmail.com