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I published a blog a few days ago on Lion-OCBC Securities Hang Seng Tech ETF and how I was using it to gain exposure to Alibaba, Tencent and some other Chinese tech companies.
I said that I was taking it slow with the ETF and that my initial investment wasn't even 0.5% of my portfolio in market value.
Why take it slow?
Although there were some signs that the dust could be settling, technically, the downtrend was clearly still intact and low could go lower.
Buying the dips in an uptrend would be buying as Mr. Market climbs a wall of worries but in a downtrend, Mr. Market flows down a river of hope.
Getting our hopes up in a downtrend could set us up for disappointment.
Also, most of the time when I went wandering out of my circle of competence in the past, I ended up hurting myself and pretty badly sometimes too.
Although I researched the ETF and some of the Chinese tech companies it was tracking before I made the decision to put some money on the table, I was very sure I only scratched the surface.
Anyway, consistent with my plan to limit exposure to 1% of my portfolio for a start, I nibbled at the ETF earlier today at a price 10% lower than my initial investment.
With this purchase, my total exposure to the ETF stands at around 0.5% of my portfolio now.
What do I plan to do next?
I will be waiting to see if the low of 15 March would be tested in the coming weeks.
If the low should be tested, I would most likely double my investment to increase total exposure to around 1% but I might add more if I should see a positive divergence.
I would look at the momentum oscillators like the MACD and RSI to do this.
Positive divergence means higher lows in the momentum oscillators as price retests the low or forms a lower low.
A positive divergence would give me the signal to add more to my investment.
It would suggest that the selling pressure could be easing and that the price could see a more sustained recovery.
Still, I would take it slow because we could also see lower lows in price and higher lows in the momentum oscillators for many months to come.
In the absence of a positive divergence, I would err on the side of caution and not add too much to my investment.
Been a while since I did some technical analysis.
Hope I am not too rusty. ;p
Related post:
Investing in Alibaba and Tencent now.
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| Source: CNA, 22 April 22. |
"China's central bank chief pledged on Friday (Apr 22) to keep policy accommodative to support the slowing economy..."
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27 comments:
Wow, our Oracle is stepping up to the game!!!
I also have a microscopic holding in the HSTECH ETF in the HKEX.
But the amount I invested is in the realm of what AK would fling out of the window without even noticing!!!!
0;)
Dear AK
Brave move indeed although I must confess that the HK index as well as the HSTech index is looking good value at the moment . The HK index at circa 20000 plus, has a significant tech loading as well. The MCHI US listed Chinese ETF is broad based and still has lot of the tech majors
As regards the locally listed OCBC ETF, I am not certain how good T.A. can be relied upon as the ETF started trading only for over 13/14 months
Instead, individual stocks that form the bulk of this index, is the top 5 holdings are readable. They are all still on a down trend and long breached both their simple, exponential as well as weighted MA. I am certain this will be the case as long as the bearishness towards tech prevails globally. I do concede that they are very enticing at these prices though and if I could spare funds, I would average down on my original position that has been significantly underwater as I had described last week
Best wishes
Garudadri
Hi Laurence,
I don't have a good track record investing for growth.
More comfortable with investing for income.
Another good reason for me to keep this position relatively small.
Crossing fingers. ;p
Hi Garudadri,
Thanks for sharing your perspective. :D
Well, I am not that brave because these are unchartered waters for me and, so, I am keeping the position small.
Talking about unchartered waters, I must keep in mind what Charlie Munger's grandfather said about staying close to the shore if we must go swimming. ;p
I bought this one when it was 1.13 and i have been buying the dip another 2 more time since then.
Buying this give me peace of mind and sleep.
God bless us both.
Hi Unknown,
Well, I just made my second purchase today.
Pretty sure I will be making a few more purchases in the future. ;p
Good luck to both of us. :)
U.S.-listed Chinese stocks jumped across the board on Friday with tech shares leading the gains after Beijing pledged more stimulus.
Charlie Munger on investing in China.
Hi AK,
Looks like there is positive divergence from the weekly, but not on the daily as the daily low was not tested. how will you interpret this? Thanks :-)
Hi James,
I was looking at the chart last night and it looks like Mr. Market is feeling more optimistic now. :)
My tiny position in the ETF is green again.
There could still be aftershocks but as long as the momentum oscillators continue to form higher lows, the worst is probably over.
Now, we want to see heavy volume on the upside and if that happens, the gap formed in early April could be filled.
Gaps eventually get filled and that gives me a near term upside target of 80c.
Hi AK, thanks for the insight! Let's see how it actually plays out and stay pragmatic as you always said :-)
Hi James,
Just talking to myself, of course. ;)
It might sound perverse but I am wishing for another plunge in price and also a higher low on the momentum oscillators so that I can buy more.
At 0.5% of my portfolio, right now, my investment isn't going to do much for me. ;p
Hi EX,
Even though price has fallen quite a bit, it is still higher than my average purchase price.
So, I am in no hurry to add.
I could average up if I think that fundamentals are improving but I am not sure that they are.
Everything being equal, I would add if unit price were to go lower from here and I see 67 cents as a possibility.
Anyway, this is just a small experiment for me.
So, not going to let it bother me. :)
Reference:
Trading Chinese tech stocks for pocket money.
Always a joy and great learning in reading your post.
God bless you,
victor
Hi Victor,
It is probably better to think of ASSI more as entertainment and less as education. ;p
Glad you enjoyed reading my blogs. :D
Hi EX,
I am absolutely low tech.
So, snail mail works for me. ;)
Slow but steady AK71 as we know you. Please do shout or entertain if u prefer to call it over here if u buy. I know disclaimer, Sir.
Buy today i buy some BYD, I do own HST too.
AK entertainemnt is great education to me and many.
thank, God bless you.
victor
Hi Victor,
EVs are likely on track to replacing all ICE vehicles in the next decade or maybe two especially after limitations are overcome when it comes to larger vehicles for long distance transportation.
Still, we don't want to pay too high a price for investing in high tech businesses and chasing high growth stocks and ignoring their super high PEs is probably a bad idea.
Slow and (mostly) steady is good for my heart. ;p
Latest video in my YouTube channel on this:
Chinese high tech stocks crashed! How like that? What to do?
i think next is 14000 for HSI, nvr expect it to drop from 17000. I did some buy there, I will wait and see. Ty
victor
Hi Victor,
For sure, technical analysis is useful for identifying support and resistance levels.
However, it cannot tell us if those levels will hold.
Just have to do what we can.
Crossing fingers.
Bought Lion-OCBC HS Tech ETF today at 49 cent a unit.
Hi AK,
Do you usually add to your portfolio whenever the price drop ~10%?
Hi Yv,
It would depend on what is the value of the stock at that point in time.
If price drops 10% but the underlying asset value drops by 10% or more, there is no reason to add.
There could be other reasons depending on the circumstances surrounding that particular asset too, of course.
Something interesting:
What a reader said about AK...
If a stock losses 50% and subsequently losses another 50%, it usually rise 100% within one year if it is not because of fundamental issue.
This is what i learn from experience. Hope so.
I buy more today. my target px is 1$ and above in one year time for a 100% over gain.
See this time next year. If it go up another 50% from here i will buy more.
victor
Hi Victor,
I see many layers of resistance on the way up for the HS Tech ETF.
An important one to clear is the declining 50 days MA which I think of as the eventual target in the medium term.
It is now at 66c or so.
Anyway, always good to have a plan of your own.
Hope all our plans pan out well.
Crossing fingers! :D
AK, HST is under stress now, shall you buy more sonce foreign funds' are damping. Wish to have your view. Thanks
Hi Sunny,
I bought more of Lion OCBC HS Tech ETF recently at 49 cents a unit.
You might also want to listen to this YouTube video I produced recently:
Chinese tech stocks crashed! What to do?
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