Tuesday, January 31, 2012

Turtle, selling again?

Yes, I am selling again. It does not matter to me whether the market tops out tomorrow, next week, next quarter -- I will not regret this decision. No one knows tomorrow.

I have seen it so many times. It's hard to quit when you see the market continues to go up every time you sell something. That is why contrarian investing is so difficult. You have heard this before

Buy low, Sell High.

In reality when you buy low, it may go lower. Then you got smarter, buy at the first higher higher, etc.........that will make you hesitate and wait and wait till it almost tops out.

In exhaustion rally, it will tend to frustrate you. A lot of people keep buying on dips. Every time you sell something, the price will continue to run. Then you regret, you jump in and buy. That is why people ended up

Buying high and selling low.

When you are middle of it, it's hard to see whether today is a peak. A mistaken peak interpreted as a low will cause people to over stay in the market. The worst is they don't reduce their exposure and get 100% invested. When everyone rushing for covers, exiting a 3" door, you know where I am leading you.

The biggest mistake a person can do is having NO CASH when the market corrects/crashes. A lot of questions are lining up to shoot me. What if the market continues to move sideway to allow the earnings to catch up. What if foreign investors come back. What if syndicates decided to play up the penny stocks? What if liquidity has no where to go but stock markets?

It's all possible to those IFs questions. KLCI 1,500 selling around historical average 15X is not very compelling. Don't we think chances of we see KLCI 1,200 is higher than 1,700? Seriously.

1 comment:

Mohammed said...

I will not question your judgement but will make a general point.

Since, a lot of times, no one can say for sure where the market is headed or how far it will go on the way up or down, your chances of you getting it right is slim. An informed investor has a better chance when it comes to judging the merits of a business, its future prospects, the quality and shareholder focus of its management and so on.

I believe, generally, one's decision to buy or sell should be based on the fundamentals of a company and valuation. Instead of trying to gauge the moods of the market, one is set free to concentrate on aspects of a business that count.