22 May 2010

In the midst of selling – Pick and Choose

As an investor, looking at the market falling freely for the whole week gave me two different approaches. Depending on your stocks to cash holdings, it could dictate your next move.

Mr. A (If you are holding many stocks)
There is a possibility that your heart beat is getting greater, and you are thinking whether to sell your holdings now.

Mr. B (If you are holding many cash)
There is a possibility that your mouth is getting bigger, trying to swallow whatever stocks you had targeted for long time, and you are thinking whether to utilize your holdings now.

Whether you are A or B, my advise would be keeps on holding to what you have now.


Answer to Mr. A
If you want to sell, you should sell it earlier, before the week, not after. Depending on type of stocks you are holding now, some may fall less, and some may fall crazily over the week.

Those that fall less, most of them is dividend counters, which means the price is relatively stable. If you sell now, it would not make a lot of difference, and you will lose for brokerage fees.

On the other hand, those falls crazily are those speculative/growth counters, which largely based on the sentiment of the market. In stead, you should buy before the sentiment going up again, but not now.

Answer to Mr. B
I know you are so tempted to enter the market now, fearing that the market will stage a strong rebound after one whole week of falling. However, in my opinion, this is in the midst of falling only. Actually, you can start buying now if you do not mind. The mega sales is going for another week or two, just be patience.

When is a better time to enter?
Technically, the next support level would be around 1,230, last seen in Oct 2009. Go down further, would be 1,155. Anyway, value will start to emerge at 1,230 which mean there is another 55 points to go. So, wait for the number (or buy 4D now) before entering the market.

One last Tips:
Pick and choose for those fundamentally strong companies, which have fallen hard and still remain in the radar of investors, like Faber, Unisem, Evergreen.

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