Where is the next party? read the tagline of a discussion topic among members of an online investors community during the recent stock market rally in late March and early April.
As the discussion among the forum members on Dubai Share Talk (www.dubaisharetalk.com) continued, it was evident that many of them had made hits and misses. Some made money, some didn't. The entries captured the essence of short-term investing.
Part-time investors were trading to recoup some of their huge losses suffered in the past year. Obviously, it's not an easy job to predict which shares will go up and which will fall.
"Where? Where?...and when?" wrote sam111sam, a member of Dubai Share Talk, in his entry on March 31.
"This week was the IAIC [Islamic Arab Insurance Company] party, more than 25% in 48 hrs...
"There were some trials on UPP [Union Properties] also for the past two days. Today was Rak Properties's party. Deyaar party is going on now.
"Emaar party ended on a sad note after soaring from 2.01 to 2.47. Aldar party last week was better tha[n] Emaar, it took the share from 2.1 to 2.8, 33% in 72 hrs.
"What we see now is very selective picking only on 1) Fundamentally strong shares 2) Well below book value 3) Mostly below IPO value."
He signs off: "I think we should assign a big gift to the member who can get this right two times in a row!"
It was party time for many and the mood turned jovial after many months of continuous declines and losses.
GPIC, another forum member, wrote on April 5: "Well there was a few parties today... and was lucky enough to join the party-goers at ARTC [Arabtec] and Emaar, and managed to escape before the last dance! ... so here I am with my records under my arm, listening out for my next party!... think it's nice that our friends in the banks seem to be sorting the record player out for us...may see which one is going to play the loudest music tomorrow...failing any really loud noises, may head off to Ajman Bank!"
Dubai Share Talk is the only discussion forum for the English-language investing community in the UAE. It has been around now for almost four years and has grown slowly to have about 501 registered users, the most active of whom have been talking about where all the money went in the past one year.
Initially, Dubai Share Talk was secondary to Share Wadi (www.sharewadi.com. Both websites were founded by Rob Beishuizen, who started them for his own personal interest. He found he was not able to dig up enough basic information for retail investors. So, after collecting information on the listed companies, sector news and the movements of stocks, he decided to put the information on the web and share it.
But now with facts and analyses available from research reports of banks, much-improved coverage of the markets by the media, websites of stock markets and the regulator, ESCA, there are lot of sources to get information from.
"Sharewadi still continues to provide some basic information and, admittedly, it is not of the same level of sophistication as, say, Reuters and Bloomberg," says Beishuizen, an expatriate from New Zealand, who came to the UAE 14 years ago and holds a job in the private sector.
"It was never meant to be. My focus is on retail investors. So what you find now on sharewadi.com are links that allow viewers to get some basic information easily, such as a list of companies, their contact details, information about them, their results, their share price. Also I try to do some calculations like P/E [price-earnings] ratio, ROE [return on equity]."
Most retail investors would say they don't have the time to go through a 20-page report, but would definitely like to know whether the companies are profitable or not.
"Not just [whether they are] profitable, but how sustainable is that? [What about] the quality of their earnings? I try to distil such information. In some ways it is critical, but then it may not be the right indicator.
"[Take the case of] a company with a P/E of Dh20 and another with a P/E of Dh2. Well, the company with a P/E of 20 might still be the better buy.
"Gulf Investment House, a Kuwaiti company, they just lost $1 billion. So if it's a long-term investment for you, you will start to worry. So P/E won't tell you much. Also, price to book value isn't going to tell you enough. The ROE might be a slightly better [guide]. But again, there could be some questions there too."
But with time, and because of increasing community interest, Dubai Share Talk has become the primary source and sharewadi.com has taken a backseat.
"I am fine with it and now I spend a lot of time moderating the discussion," says Beishuizen, who does not see these websites as a viable business proposition, given the small number of non-Arabic, English-speaking retail investors.
"It's more a hobby, a passion and I would keep it that way. I like the fact that I made something and people use it. [The fact that it is] not driven by commercial considerations is perhaps the reason that it appeals to retail investors."
That it has an appeal is beyond doubt and many feel that it provides better information than any of the other free websites.
An entry by 'lala' on April 11, 2007 says: "...my name is Umar from Russia [Chechnya]. [I have been] based in Dubai [for the] last 14 years and lost a lot of money in Dubai equity last year. But from this site I received a lot of information and [am] really [grateful to] the founders of these site[s]. Sometimes [their] analysis is better than [that of] big institution[s] and I am really thankful [to] them, [e]specially to [Mr Sharewadi]."
Mr Sharewadi is, of course, Beishuizen.
Without wanting to reveal his real identity, 'sam111sam' echoed the same views in a telephone interview.
"It's a stock news sharing forum, and being a free format, you can mention anything that you want to discuss and respond to questions - whether you are in accounting, or technical analysis, or fundamental analysis. I have access to loads of expertise that is available 24 hours a day."
Talking about the recent 'where's the next party' discussion, sam111sam said: "Many of the guys had great contributions. Many of them were spot on. [They made good predictions] because many eyes looking at the same data is better than one [set of eyes]. Someone will come and say that the stock has not responded to certain parameters and maybe that's the next one to fall or rise."
While sam111sam considers himself a short- to medium-term trader, Beishuizen is more of a long-term investor.
"I was down to 25 per cent of my real investment, now I am at 50 per cent," said sam111sam. "In the past two months I have recovered a big part of my loss."
Rather then putting an actual figure on it, Beishuizen said, "I've suffered significant losses along with most other UAE investors."
But he did not seem alarmed.
"By and large, I am holding on to them [his stocks]," he said, adding that he had made some sales.
Both investors, despite being far from recovering their losses, exuded confidence in the markets, despite the economic problems.
"The basic problem - everybody feels - is liquidity," said sam111.sam. "The sentiment around that leads to properties collapsing and that in turn leads to real estate companies suffering. And then when real estate companies suffer, that means banks suffer because they have loads of assets in terms of real estate and loads of mortgages...
"Also, if the cost of money for deposits is very high, then when they lend you money, they also need to recover it, right?
"And when the interest rates are too high, then business cannot expand and it's much more difficult to buy a property because it's too expensive.
"I think that until we manage to control the interest rates, properties will suffer. And as a result, banks will suffer and bank ratings will suffer and people will be afraid to invest their money. So, as you see, it's a vicious circle."
But sam111sam feels once the situation improves "you are going to see huge improvements because, fundamentally, there is nothing wrong with the UAE economy. It's part of a problem that has affected the whole world and once that credit crunch is resolved, the markets will again start to soar - really soar."
Investors like Beishuizen, who have money invested for the long term, are willing to carry on.
"The question is, do you believe in the UAE story? Do you believe in Dubai?" he said. "For me, there's no question."
"But yes, if you talk about individual companies, that's a different story. The thing is I bought into companies that have sound fundamentals and will be around for a long time."