Wednesday, 19 February 2014

During Bull Market....

During bull market, everyone is his own stock market expert. You will seek out someone and if he or she say the same thing, this will sort of confirm your view on certain stock. But since it is a bull market, everyone view is positive regardless of which stock. Thus, everyone moves along the same direction. Everyone has their stock to offer, be it based on fundamental or hot tips, believing that this stock is good and have high hope it will go up. In the end, you have so many stocks to pick. Every other stock seem to go up every other day. How to be wrong, is the mood of the day.  Merry mood is all around. Long term investment is no longer an attractive word. Being a disciplined long term investor, you too deviate from your long held investment principle. Suddenly you find yourself putting your money into some of these unknown stocks that you never heard of not too long ago. The interesting part is these unknown stocks start to give you better and faster returns in no time as compare to your long term stocks that you already had in your long term portfolio. You start to question your wisdom to continue to keep those long term stocks and tempted to switch to stock that gives faster returns albeit unknown stock to you not too long ago. Unknowingly or knowingly, by now you already being sucked into the vicious cycle of getting in and out from one stock to other stock. The final outcome can be easily predicted. We shall see that in 2015 or might even earlier.


Those went through the up and down in 1987 and 1997/8 will able to fully comprehend what I just said.


And, I would like to add this - Stock expert does not come out during bull market. The real stock expert is the one that stay true to his or her investment principle during bad time and good time. How many of us is really one?


Having said all that, one also should enjoy the euphoria brings about by the buoyant stock market. Punt, contra, gamble or speculate any stock, whatever you want to call it. Life will be boring without a punt or two in stock market. But always watch your back. Set aside a small fund just for that to satisfy your thirst for excitement. Even if this fund got wiped out, you are lest concerned as your main capital is still preserved. But don't kill the goose that lays the golden eggs. Don't turn an enjoyable venture into a nightmare when the big storm come hitting. 

On another matter, UMA was back into the limelight recently. This remind me of what happened to Ecowld not too long ago and DSonic just yesterday.

Contrary to many may think, UMA is good thing for it will bring back normality otherwise it is a mindless pure speculation play. UMA is a psychology tool to tackle emotion. Speculation is about emotion. Emotion of greed. How else to explain if it is not psychology tool since UMA does not change a bit on the company fundamental but the stock price will tumble upon UMA being issued. What is not good is this is a sign of coming of an unhealthy market volatility. This is especially so when UMA is issued to good fundamental companies. Nevertheless, stock price will recovery fairly fast for good fundamental company. I predicted more UMA madness in the coming months.

On a happier note, are we not in bull market? If it is not, why are we talking about stock market day in day out? UncleZ too won't be writing here if we are not in bull market and certainly you won't be reading what I wrote if we are not in bull market.

Invest wisely. Stay invested. Good luck.

1 comment:

  1. thanks for sharing this Unclez. It is indeed that you will start to questions your wisdom to keep those long term stocks. That happened to me recently too and I start to allocate a certain amount of fund to invested in the stock that are not so famous but with fundamentally strong. Luckily I got into some counters that give me pretty good return like Matrix, MPHBCap, CMSB, TDM, CBIP, PTaras, Tambun and some etc. I started to look at some counters that recommended by Unclez like OCK, Scable, Daya etc and will buy some. I do see some odd transaction for MFCB recently with pretty high volume which i might be wrong :) Hope you continue to win big money.