My Time

Sunday, September 30, 2007

Mr Market

What mistakes can we learn from the retail investors in S'pore stock market:

1) Most retail investors "forgot" to take profits near the previous highest close of 3665 & hence, have no bullets to bargain hunt near 3060 & 3150. Recent low is only 2962. Please note no one can catch the lowest points in recent crash also.

2) Some retail investors are 90% or 100% in stocks before the big crash. Hence, have no more opportunity funds to bargain hunt when STI crash to 2962 recently.

3) Those who have opportunity funds do not know how to bargain hunt as most of them have forgotton the teachings of Warren Buffett & got caught up by extreme fear.

4) The opportunity funds lying in banks only give them less than 1% returns, in less than 2 months. Most banks give zero returns for fixed deposits for less than 2 months. But Mr Market gives these investors >15% returns in less than 2 months. Hence, Mr Market proved these people wrong again, for not seizing the opportunities to make good returns from stocks markets when market crash to STI 2962 as compare to returns putting the same opportunity funds in banks for the past 2 months.

5) Most good stocks has recovered >40% from its low of 2962. Which means an average investors could have made at least 15% easily, although not 40% from the recent crash. Much better returns from recent crash, at least 8 times more returns as comapre to savings deposits or fix deposits returns in less than 2 months. Please do your own sums to confirm also.

6) Some investors has forgotton about valuation & cut loss near the low of STI 2962 due to "irrational fear". The above points is only confined to STI markets only.
Last but not least, please note STI market has recovered more >700 points from the recent crash of 2962 already. Would most retail investors make the same mistakes again, when the next "big correction" come again?
Or would the STI continue to break new high? Your guess is as good as mine.

Nobody can guess the market tops & bottoms of STI & STI break new high to 3714 today.
Unbelievable when everybody is so fearful at STI 2962 & 3100. Whether a person can benefit from bargain hunting is dependent on knowing Mr Valuation, which i am still learning very hard also.Mr Market make a fool of some investors recently, when some were guessing STI 2800 or 2700, as STI hit 3714 today. Hence, guessing market bottoms is proven futile or fruitless when index crash >600pts recently.
For example, those who waiting for STI 2800 or 2700 for bargain hunting is proven wrong by Mr Market because market recover >700pts after hitting 2962.
Most importantly, is to know where is your mistakes as STI has recovered >700pts up to today.
Actually, I almost kanna bombarded when asking people to bargain hunt near 3000 to 3100 recently. He got quite emotional then.. No offence! I may come back to STI at STI 3200 or 3070, no fix views really. In my personal opinion, when STI hit new highs to 3714, there is no more investment value in most stocks now, but not to all counters.
But trading values still exists definitely, as long you are discipline with your take profits or cut loss strategy if STI crash from 3714 or from 3800 or from 3900. No one knows.
Investment value only appears when there is a big correction of 16% to 20%, not too late to know now. Hence, I would rather learn from both Mr Valuation & Mr Market.
Don't forget to learn hard from Mr Valuation also. Lots of people forgot Mr Valuation when market crash to STI 2962 recently.

Hints: If someone want to sell you Capland at $6.50 in the next correction, why not?
If someone want to sell you Hiap Seng at 70cts, why not?
If someone want to sell you AsiaEnt at 41cts, why not?
If someone want to sell you Kepcorp at $10.70 again, why not?

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