Tuesday, January 15, 2008
Don't sell all you want and all you can!
I think this week is probably the Armageddon as everyone is selling in anticipation of the worst possible results of the U.S. financials to be released, and its ramifications over the economy and everyone else. And as normally we tend to over-exaggerate bad things, the end of the tunnel should be near, share price wise.
I was going to suggest we start looking for bargains, but then I figured most of us (including myself) are probably out of cash and as convinced to be a long term investor as ever. So the next best course of action is to do nothing and wait for the storm to pass, which it certainly will, just as certain as it will come back one day. Like Warren Buffet once said people have this weird logic that they should shy away from the market when there's uncertainty or bad news, thinking however that once that's cleared the good times will last forever.
If you are a fund manager then you lose this option, as redemption demand can come anytime and you need to have the cash ready. Even if you have solid investor backing you will still need to sell down fast, because you know your weaker competitors are selling and that's driving down the prices of many over-valued shares which you all helped build up in the good times. Even selling below value isn't a concern as long as you sell faster, because relatively the fastest seller will still outperform in the end.
With large presence of indiscriminate sellers, that's why I believe good catches can still be made in difficult times.
I was going to suggest we start looking for bargains, but then I figured most of us (including myself) are probably out of cash and as convinced to be a long term investor as ever. So the next best course of action is to do nothing and wait for the storm to pass, which it certainly will, just as certain as it will come back one day. Like Warren Buffet once said people have this weird logic that they should shy away from the market when there's uncertainty or bad news, thinking however that once that's cleared the good times will last forever.
If you are a fund manager then you lose this option, as redemption demand can come anytime and you need to have the cash ready. Even if you have solid investor backing you will still need to sell down fast, because you know your weaker competitors are selling and that's driving down the prices of many over-valued shares which you all helped build up in the good times. Even selling below value isn't a concern as long as you sell faster, because relatively the fastest seller will still outperform in the end.
With large presence of indiscriminate sellers, that's why I believe good catches can still be made in difficult times.
Comments:
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Personally I think that "we ain't seen nothing yet". Financial powerhouses have not yet declared (or even found) all losses. Central banks don't know whether to fight inflation, or keep a lot of liquidity. (They probably end up raising money supply considerably, and lie about the inflation.)
Also a possible crash of China's stock market is still in the pipeline. Early 2007 I did not believe what they said ("the Chinese government won't let the stock market crash until the Olympics"), but apparently enough people believe it, as this bubble hasn't really burst with a big bang (yet).
I am not selling "all I can", but May-Oct 2007 I sold about 1/4 of my holdings. At this moment I'm not eager yet to get back into the water. On the other hand, I'm not in any panic either, and am not planning on selling more, even though I expect quite some downside.
Also a possible crash of China's stock market is still in the pipeline. Early 2007 I did not believe what they said ("the Chinese government won't let the stock market crash until the Olympics"), but apparently enough people believe it, as this bubble hasn't really burst with a big bang (yet).
I am not selling "all I can", but May-Oct 2007 I sold about 1/4 of my holdings. At this moment I'm not eager yet to get back into the water. On the other hand, I'm not in any panic either, and am not planning on selling more, even though I expect quite some downside.
# posted by 
: 7:12 PM, January 15, 2008
: 7:12 PM, January 15, 2008
then I figured most of us (including myself) are probably out of cash and as convinced to be a long term investor as ever. So the next best course of action is to do nothing and wait for the storm to pass
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for me, my next best course of action is to review existing profilo - then re-organise the weighting of each stock based on value-price ratio.
for sharing..
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for me, my next best course of action is to review existing profilo - then re-organise the weighting of each stock based on value-price ratio.
for sharing..
guru hing,
yes, if you happen to own some low beta stocks then i think it's a good time to consider switching to more heavily battered stocks.
but this fall is quite broad based and there aren't many shelters to start with (at least for me - i have no utilities, HK properties, China consumption & infrastructure...).
yes, if you happen to own some low beta stocks then i think it's a good time to consider switching to more heavily battered stocks.
but this fall is quite broad based and there aren't many shelters to start with (at least for me - i have no utilities, HK properties, China consumption & infrastructure...).
manok hing,
yes, we may have seen nothing yet, but most ppl may not need to see everything before they sell.
every year there's relatively safe and unsafe moment to go into the market, i just think we are now approaching the safer side, while taking additional comfort that inflation is a good friend of stocks but enemy of cash.
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yes, we may have seen nothing yet, but most ppl may not need to see everything before they sell.
every year there's relatively safe and unsafe moment to go into the market, i just think we are now approaching the safer side, while taking additional comfort that inflation is a good friend of stocks but enemy of cash.
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