Thursday, April 17, 2008

Speculating vs. Investing - Hua An

China’s GDP Q1 08 grew 10.6%, down from 11.7% compared to same period last year. Everything were up, fixed asset investment up 24.1% and CPI was still high 8.3%, down slightly from February 8.7%. Food prices were responsible for bulk of high CPI, contributed 6.8%. Retail sales of consumer goods were up, 20.6%. The Chinese economy is still over-heating, there will be further tightening in the coming days.

Shanghai Composite Index and Hang Seng Index tumbled after the report was released at 2.30 pm today. Why? Professional traders understand the implications, they took profits, they cut losses. Poor buyers who either ignorant or anchor at the wrong price idea will continue to scoop up. If they lose money, they will pretend to be Warren Buffet one week later, swearing will hold stocks forever while watching their value dwindling.

Over in Bursa Malaysia, Turtle assumed there were some hot tips spread like hot fire around the Internet about Hua Ann - the hottest stock of the day. It was the number one active stock, 21 million shares changed hands. Some tempted to go for a quick punt i.e. hit and run since it has broken above its downtrend, heading RM $1.00, nice potential 40% profit. Of course, KLCI broke above 1250 psychological level pouring more fuel to fire. DJIA held up OK yesterday. The Wall Street Journal said Merill Lynch is probably going to write down another $ 6 – 8 billions but Asian markets were resilient. The setup was seems to be perfect. Many will be fearful of missing the party. More important is ego issue too, fear of their lunch partners will laugh at them of not acting on the tip. Many will still charge ahead, keep placing buy orders though some have turned cautious.

There is nothing wrong with speculating but do not acknowledge or unconsciously unaware they are speculating is a problem. If one acknowledges is speculating, one must accept the rules of engagement. One must takes responsibility for losing money is a result of own decision and not faults of others. One must understand if sentiments have gone South, one must quickly acknowledge, cut losses or take profits. Investing and speculating is like oil and water, they can never mix well. If one cannot read the market, no problem, just acknowledge one is not ready to speculate.

Wait a minute,Turtle, you are talking as if like buyers already losing money. Many transacted around $ 0.75 but fair enough, Turtle will shut up. Let’s review what happen to Hua Ann price on next Monday, T + 3 and one month and one year from today. Just a sanity check!

1 comment:

AC said...

Turtle, have u ever speculate?