Timing Sale of Equity

Recently, the shares of SPH rose to a record of approx. $4.65/share. Intraday of $4.67/shares. This is the probably highest in the past 5 years. It rose to this price level due to an earlier announcement of intention to issue Reits for some of SPH properties. The issuance of Reits tied to properties will allow the inherent values of properties to be realized and gains are possible due to recent inflation in properties prices in Singapore.

In that short duration of price peak, I had managed to sold off a small quantum of shares of SPH at $4.64/share. Somehow, there is a sense that the price is not sustainable. True enough, SPH subsequently announced that its profit dipped substantially due to poorer revenue from cash cow business of publishing and advertisement. After the announcement the price slid back to $4.25 to $4.28/share (9% decrease), which is a more historically sustainable level. Dividend of SPH has been reasonable and it is difficult to sell away such inventory especially in a low interest environment.

It has not been easy to identify the peak and sometimes, I will be wrong, for example M1 shares. Sold all shares in M1 at $2.46/share, but the current price has risen to close to $3/share. Timing the market will require some lady luck on your side and accuracy of decision will only be evaluated as an afterthought.

Price increases may take a long time to realise. However, a substantial price reduction can be swift and unpredictable. The recent drop in gold price to under US$1400 illustrates this. It took place in less than a week.