- Joined
- 12 January 2008
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We all get stuck in unfavourable situations when dealing with the markets. My latest is CBR and I was caught by the heavily discounted cap raise that thumped the share price. OK fine it happens how do I deal with it. The SPP price was 1.60 and I thought that this would provide a solid support level and held. That idea was correct and price held the 1.60 level and started to rally once the cap raise was completed. Things were looking up. Phew. Until . . . bad news.
The world wide shortage of semiconductor chips has forced some car manufacturers to pause production. A pause of this major activity has ramifications to all manufacturers of car parts, including wheels.
One car manufacturer has cancelled it's order with CBR for 1800 wheels. It may not seem to be many, but it's the canary in the coal mine, an early warning of further cuts.
I have no doubt that we will see many more instances of disruptions caused by the Gov't responses to the Covid pandemic.
Just as the economies are starting to open up, it's easy to be optimistic that the worst has past. I expect to see more disappointments in the months ahead.
eg. Lack of migration due to border closures is starting to cause labour shortages in many industries.
CBR has got the money from the cap raise to build it's new assembly line. I expect this will take some time (year?). While CBR is building this new line, how is the share price going to hold up? If there's further sales cuts? How does a long term investor hang on while the share prices are falling? How low can prices fall before they represent value to an investor when future sales and especially the timing of these sales orders are unknowable?
I'll be monitoring CBR for a reversal setup but it may take a long time.
The world wide shortage of semiconductor chips has forced some car manufacturers to pause production. A pause of this major activity has ramifications to all manufacturers of car parts, including wheels.
One car manufacturer has cancelled it's order with CBR for 1800 wheels. It may not seem to be many, but it's the canary in the coal mine, an early warning of further cuts.
I have no doubt that we will see many more instances of disruptions caused by the Gov't responses to the Covid pandemic.
Just as the economies are starting to open up, it's easy to be optimistic that the worst has past. I expect to see more disappointments in the months ahead.
eg. Lack of migration due to border closures is starting to cause labour shortages in many industries.
CBR has got the money from the cap raise to build it's new assembly line. I expect this will take some time (year?). While CBR is building this new line, how is the share price going to hold up? If there's further sales cuts? How does a long term investor hang on while the share prices are falling? How low can prices fall before they represent value to an investor when future sales and especially the timing of these sales orders are unknowable?
I'll be monitoring CBR for a reversal setup but it may take a long time.