Saturday, July 5, 2008

Bursa Technical Glitch, Enough Fears?

Was last Friday sells down reflecting enough fears? I think the retailers were really panic. One of my good barometers in the past was Nestle. I consider this stock almost crisis proof. It has also survived 97/98 Asian Financial crisis. However, when the conservative and "Buffett" like investors begin to dump share was really interesting. See Chart.

The institutional investors were panic but the level of panic was not that bad. Let me pick IOI Corp. The volatility post General Election trading day was almost 10% but last Friday was only like 4%. I would consider less than 5% is normal.

After the post general election sells down, IOI Corp was never been able to climb and moving sideways for the last three month despite of steady rise of crude oils and CPO. I'm taking this a good read of foreign investors could have exhausted selling for the last three months.

The bullish guys begin to be shaken -- revising down and even thinking of 1049 level(the day that Thailand announced to impose capital lock up) from 1220, down 14%. From a contrarian's point of view we should not follow the crowds. We are already down 25% from the peak. At 1134, we are selling at almost a single digit PE, do you think we deserve this s**** despite of political uncertainty? I'm going to stand firm and not bailing out.

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