Friday, April 9, 2010

Retail investors are still in high pessimism

This is how most people gets it wrong, buy high sell low. This chart tells it. One of the sentiment indicators is look at discount of closed end fund to NAV. At the peak of pessimism in March 2009, these funds are selling at 20% discount and now is narrowing but not at a premium yet. It still has some rooms to move.

If you feel that you are still kicking yourself for missing the opportunity, there is still an opportunity. iCapital is selling at almost 20% discount to its NAV. The level of pessimism is same like March 2009 in matured market. This means our market is highly inefficient because the institutional investors have not been doing enough research to swallow the mispriced stocks. If you buy into iCapital now, you are getting Public Bank, F&N, Petronas Dagangan, Parkson and etc at 20% discount. So, for those love to buy low sell high, the window is still open but need guts to make the first move! I was at first wanted to keep quiet and keep buying but have been feeling guilty so I share it, though it cost me a bit because price starts to move after I published it in a number of occassions. May be I just "perasan":)-

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