Wednesday, 12 February 2014

Contra game in stock market

Many of the retail investors will sit in front of their computer to monitor their stock pick whenever they have just made their purchases. They will start to pray and hope that the price will start to move up the very next moment. They are unable to do anything. So just pray pray and pray is the order of the day. This not only happen to contra player but sometime also to short term player. We have to get real. No retail investor or even if all investors combined could able to do anything to move the share price. Only those big funds could only do that. Total transaction values in Bursa is easily more than RM1 billion everyday. Transaction values by retail investors on the street is only account for a fraction of the total daily transaction values. This point to the fact that the market is controlled by the big funds. I think most retail investors understand this, knowingly or unknowingly. But why do retail investors still play the stock market the way they played.

I can only think of one thing. In the absence of legal venue to gamble, stock market is the only convenient venue to try their luck. Many may disagree with me. The fact that most of us want to make quick and easy money is a trait that associated with gambling. The other trait that associated with gambling is short-term memory. Once burnt, one will swear will never make the mistake again but will repeat the same mistake in no time. I had seen it in 1987, 1998 and 2008. They repeated it over and over again. It is such a heartbreaking scenes.

My advice is always the same. Invest in stock market, Yes, by all means but invest wisely. There is no such thing as Contra wisely. Contra play is not suitable for people on the street - the retail investors. Yes, it sounds peculiar to hear that. That's the reality. Contra play suits well for the fund managers. They have the upper hand of the game. Retail investors is just the extras just like we used to call those in film production.

Sometime I wonder is there such a term as retail investor. Maybe retail player term sounds more appropriate.

If you have extra money, invest meaningfully in good stocks. If there were going to be any storm in the stock market, long term investor will not be severely hit. Take for example, if Presbhd price were to drop by RM1.00 tomorrow due to major market correction, my original investment capital is still very much intact. Consider that if I were to buy and sell, I will definitely be caught severely by any sudden major market correction. Think about it.


On another matter, later I will post a table showing how my 59 years old investor friend managed to pull off a spectacular gains from the stock market in less than 6 months time, but not until I could figure out why I am unable to attach the table or picture onto my blog space.

P/S: My definition of Contra does not necessarily mean the usual T+4. My definitely is more towards on the behavioural stock play in and out of a stock within short period of time i.e. 1 - 10 days.

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