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Another bloodbath?

Thursday, August 18, 2011

At this very moment, stock markets in Europe and the U.S.A. are down between 3+% to 6+%! Will Asian markets be drenched in another bloodbath tomorrow? Buckle up because it seems like it would be a rough ride.

What am I going to do? Stick to my plan. What else?

If some of the counters I am eyeing should fall to my target prices, I will collect more. I am pacing myself as there is no way of knowing how much worse this will get.

Being invested for income, having regular dividends and income distributions will provide me with reliable cashflow during leaner times as I wait for the recovery which is bound to take place one day.

Stay invested in Asia. This is where all the growth is and will continue to be.

Read: DJIA falls below 11,000.


qinzheng said...

Be fearful when others are greedy, and be greedy when others are fearful.

Buy in slowly....

Don't worry Be happy, have a good nite!

AK71 said...

Hi qinzheng,

Neatly encapsulated in those words. Thank you. :)

Sim said...

I see a target on S&P down to 1072 levels , technically. Shopping list ready ?


Anonymous said...

Hi AK,

Its always the most important to stick to the plan which I see you say you're doing.

I notice that your plan is to average on losses and buy more when things go down.

While everyone has a different strategy, this bear trend could result in sitting on losses (albeit paper) for a long while.

Also, is it wise to average so quickly? Just rhetorical but I think you get the idea. But perhaps you have lots of capital and that will be a different story.



Hwang said...

But you don't know when people are greedy, or fearful.

I can also say that i should be fearful now because everyone here including AK is greedy. :P

INVS 2.0 said...

Bought up some shares yesterday but no regrets even with the bad news today. This is I loaded my counters at their ultra-discounted prices.

Like the first week this month, the damage is only temporary. Even with my counters dip further downwards and making significant paper losses, there is no fear.

If the market really dips so much and creates another historic low, I would just buy again to average down the cost.

Wish us a happy huat ah once the market recovers. :)

financialray said...

Think a decision will have to be made if necessary to activate reservist mobilisation.
Ha ha that is to consider using my CPF monies to invest.

I think the drop is hinting to Ben Bernanke for 26 Aug 2011 decision of QE3. If no hint of QE3, further drop could be dreadful.VERY dreadful. Better stand by.

AK71 said...

Hi Sim,

Thanks for sharing the TA on the S&P. Shopping list is ready. ;)

AK71 said...

Hi Jim,

My plan is not to average down on losses actually. ;)

I bought more CMA and NOL at one stage because I was pre-empting positive divergences. As the possibilities were negated, I ceased accumulating shares of those companies even though their share prices went lower (and are much lower now).

What I am standing ready to do is to add to my long holdings on those counters with strong fundamentals and offering very attractive yields. :)

AK71 said...

Hi Hwang,

Well said! There are always two sides to a coin. Hahaha.. ;)

AK71 said...

Hi financialray,

I think many expect the Fed to launch QE3 if the stock market crash gets much worse. We can only wait and see.

My CPF-OA funds is also ready for any sharp drop in price to scoop up some SPH shares on the cheap. ;)

vliamsoh said...

Don't bet on a QE3. STI at 2,600 is IMHO not even a bargain. What's the rush to 'buy cheaper' now?

AK71 said...

Hi vliamsoh,

Indeed, we should not bet on QE3. Nothing is for sure.

By the same token, we can't be sure that things will get cheaper.

Since no one can be sure either way, I would pace my buying and not rush. ;)

financialray said...

Yes, QE3 will only bring more pain as it is kicking the can down the road again but this time, the can will hit a huge wall.

So pessimism is not at its peak yet. That is why, not only buckle seat belt, get ready your helmet.

AK71 said...

Hi finacialray,

I will have to find out where is the nearest bomb shelter from my home. ;)

financialray said...

Hi Ak

What do u think of Ascott Reit ?
Tourism will go on strong in Asia?
at least in Singapore ?

AK71 said...

Hi financialray,

I have never looked at Ascott REIT before. So, I can't comment on this one. ;)

In a recession, tourism will probably suffer as well. Even business travellers will see a cut back. So, I am not that optimistic if there should be a recession. Crossing fingers.

vliamsoh said...

Hi AK71

I agree that no one can be sure where the market will go. In the spirit of sharing my thoughts, it all boils down to estimating the odds and probabilities. Technically, I see the STI first correction to 2650 (20% from the recent peak at 3313) and then to 2250. My feel is we are just at the beginning of a vicious bear market.

Thanks for letting me share my thoughts.

AK71 said...

Hi vliamsoh,

Always happy to have considered opinions here. :)

TA shows us where the supports and resistance are but it does not mean that we will definitely hit those levels.

I remember during the last bear market, many were waiting for 1200 on the STI but it didn't go that low and quite a few missed the boat.

Some, however, were buying on the way down and with each lower support tested, they bought more. It worked out nicely for them. :)

Anonymous said...

Big Hello AK, yes all red red one. Did you pick up anything today? Anyway i bought SGX all the way down, worth collecting? SGX will always be there. What say you AK? Happy weekend to you & family! ('@') JO..........

AK71 said...

Hi JO,

I am not into averaging down.

I like the idea of buying something cheaper if there is a chance of a rebound. Such purchases are, therefore, for a quick trade. Sometimes, such purchases turn sour. Well, too bad for me then.

I also like the idea of buying something with strong numbers at lower prices if this something has a strong dividend payout policy. Sometimes, it is mandatory like in the case of REITs and sometimes, it is voluntary as in the case with SPH. In such instances, I would buy more at supports but remembering that supports can break, I would pace myself.

Investing for income, I sleep better at night. Any future capital gain is a bonus.

Sorry for long discourse but I thought it is necessary for readers to know that I do not average down for the sake of it.

I don't think anyone has ever caught me saying "my average price per share is so much and so much". In fact, when people ask me a question on my average price for any counter I am vested in, I am usually quite lost.

SGX? I am not familiar with this one. I am afraid I have to pass. :)

vliamsoh said...

Hi AK71

Care to share where do you think the STI will be a good level to start 'buying all the way down' for the next upmove? Thanks.

INVS 2.0 said...

Hi AK47,

Looking at the stock market now and for the past 10 years, the idea of buying and holding for 10 yrs seems less and less convincing.

The new idea now is to buy when downtrend reverses into uptrend and sell when uptrend reverses into downtrend using the 200-day. Is this applicable for REITs too?

I am staying on REITs due to its attractive dividends of >6%. But if we can exercise this new idea, wouldn't it give us better returns?

AK71 said...

Hi vliamsoh,

I am working on a new blog post which is somewhat related to this. However, I am not making any predictions in the blog post, only sharing some thoughts. Please don't be disappointed. :)

AK71 said...

Hi INVS 2.0,

TA proponents would tell you that it is foolhardy to do TA on thinly traded counters. As long as the REITs you are looking at are not thinkly traded, I guess TA would work. Don't ask me what is considered "thin" though. ;)

I would use TA to find supports and resistance for REITs' unit prices. Bearing in mind that my primary motivation for investing in REITs is for income, I must make sure they pass my FA screens first. If they do, it is all down to entering at supports and waiting to collect regular income. :)

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