Dear readers, I woke up to read that an oft-cited “potential multi-bagger” stock has been wiped out more than 70% overnight Singapore time.
This stock has often been cited as a potential multi-bagger stock in the making precisely because the stock has had already seen multi-bagger growth from just around USD 2 in year 2010 to a 52-week high of USD 90.96 in year 2021, that is a 45 times bagger.
And there is potential for more growth for this US-listed stock with the narrative of a growing and immense market (China) for a defensive service that is deemed to be increasingly sought after in years to come (after-school education for students in primary and secondary school). At this point in time, I believe some readers might have an inking of what stock I am talking about in this post.
Just yesterday, news was announced that the Chinese authorities are considering asking all companies that offer tutoring to go non-profit. This sent the stock of US-listed Chinese company, TAL Education Group (yes, that offers after-school education for students in primary and secondary school) going south the moment the US stock market opened overnight yesterday Singapore time.
TAL Education Group closed 70.76% lower yesterday at USD 6 per share (down from the closing price of USD 20.52 per share just the day before).
The Chinese announcement on the non-profit tutoring consideration came amidst increasing scrutiny on Chinese stocks listed on the US stock exchange including recent developments related to Didi, AliBaba.
For investors who may have investments of Chinese-listed counters on the US stock exchange, I believe prices of your investments may have similarly gone south with the recent broader landscape surrounding US-listed Chinese stocks.
This is hence indeed the time to review the investments.
For some, the current moment may be the perfect opportunity to load up on more Chinese stocks while they are on the cheap as the current episode surrounding Chinese stocks may just be a blip from the broader trend of Chinese stocks going just higher as China continues to grow.
For others, the current moment may be the opportune moment to reduce their investment in Chinese stocks as there could be a possibility that the Chinese stocks could just go lower if there are more regulations or possibly mandatory delisting ahead for US-listed Chinese stocks.
For me, I would again highlight that there have been and there will continue to be many investors who would lose their monies investing in “potential multi-bagger stocks” be in like investing in penny stocks on the local Singapore or US front, or some random Chinese stocks that is speculated to be multi-baggers by virtue of the large Chinese market.
The speculation is real and it is often justified by the investors speculating in the investment as they will just need to spot another “Amazon” and they could become handsomely reward in time to come.
However, the truth is that hunting another “Amazon” is not easy at all. I would urge investors to heed Warren Buffet’s famous rules of capital preservation first before any other thoughts where it comes to investing:
Rule 1: Never Lose Your Money
Rule 2: Remember Rule 1
That’s it for my insights today. I Thank you once again for your support of SG STOCKS INVESTING, your Money and Lifestyle magazine! Connect with me here to follow the daily exciting and useful posts on these two blogs, Thank You for your support!
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