Fear & greed

Don't forget FEAR can kill some investors too. It can make you cut loss near very low levels.
For example, from our trading floor: my colleagues told me that there are some retail investors, during the big crash in Aug '07, out of "irrational fear" cut loss on SGX near $8.00 & cut Kepcorp near $10.70.
Now, these ignorant investors actually bang balls already, because they suppose to make decent profits from these counters instead of making huge loss due to "FEAR" today.

Not contra basis, but selling counters already pick up, near the lows . Of course, there are many other good counters that are also sold down "irrationally" due to "irrational fear" during the Aug '07 & has recovered near to record high or break new record high last few days. Hence, do not forget the negative impact of "FEAR" also, besides GREED. One way to overcome fear is to buy small & have holding powers.
Maybe a maximum stock holdings of 60% is comfortable to those very "old hands", cash holding of 40%, during uncertainty. But at STI 3800 yesterday, I choose to reduce stock holdings to 30% only. But i may increase my stock holdings again, when next crash come. Every big crash & big recovery is a lesson learnt from Mr Market & Mr Valuations. Good luck!

How do we tell a correction will stay just that and not develop into a full-blown bear market?If it happens, wouldn't one be stuck with supposedly reasonably valued stocks that can get even more undervalued? In such circumstances, would you advise to hold until the next bull market comes along or cut-loss at some point?

How do we tell a correction will stay just that and not develop into a full-blown bear market?If it happens, wouldn't one be stuck with supposedly reasonably valued stocks that can get even more undervalued? In such circumstances, would you advise to hold until the next bull market comes along or cut-loss at some point?

What I mention is only applicable to blue chips & quality penny stocks. If you are holding "junk" stocks such as Atlantac or Jade, then i cannot really advise much. If you look back the bear markets of STI in 2002 & 2003(SARS), Jurtech & Venture actually perform very well. Reason being their fundamentals strong with valuations are cheap during those years. Valuation is equally important to fundamentals.
Why?For example, those who bought DBS(no doubts about its fundamentals) at $28 or $30 in year 2000, are still bleeding badly up to year 2007. Microsoft is a good counter but it is mad to pay USD50 or USD100 per share for this counter, right?By the way, please check with your broker what is the market PE when STI is 3000pts, 3100pts & 3800pts also.

Most importantly, do you learn something from this 800pts recovery when STI reach 3800 few days ago(Reflections)? My mentors tell me market has no place for EGO & market is much bigger than you & Me.
That's why a STI 800pts recovery is a harsh but good lesson for me, if one can humbly reflect. No offence!I am still learning from many shifus or mentors, & colleagues from the trading floors.