Sell stocks now and wait to buy back lower?

This blog post is in reply to a question posed by a reader, Poh Huat.

Read Poh Huat's question: here.

Saruman, the White?

Hi Poh Huat,

If we can tell accurately when the market is going to crash, it would make sense to sell everything before that. If we can tell accurately when the market has hit bottom, it would make sense to throw in everything including the kitchen sink. ;p

Question: Can we tell accurately? This is where we try to make sense of the charts using technical analysis and I dabble a bit with this as you probably know.

However, I cannot say that I know with a great degree of accuracy if the market has peaked or bottomed. It is quite obvious from the moves I made which I blogged about.

What matters more to me is not to overpay for any investment. By this, I do not mean that if I pay $1 for a stock and tomorrow it becomes 90c, I have overpaid.

I mean buying at a price which I think the stock is worth or at a price less than what I think the stock is worth. If I have not overpaid, I think it is good to hold.





Of course, prices could go lower and as long as we have not overpaid, it means that the stock has become more undervalued. So, we should, in fact, consider buying more.

It is, therefore, important to have a war chest ready. It would be quite miserable to see all the undervalued stocks in a bear market but have no money to buy.

I hope this answers your question. :)

Related posts:
1. If we want peace, be prepared for war.
2. When to BUY, HOLD or SELL?
3. STE's story: Investment strategy.
4. Revisiting my strategy with Mr. Munger.
5. When to be fully invested?

Invest in stuff we understand.

Avoid investing in stuff we can't understand.

Try to understand the business before plonking down any money in it.

"Never invest in a business you can't understand."    
- Warren Buffett.

Don't buy just because someone else is buying.

Related posts:
1. How to be "One Up On Wall Street?"
2. Journey to financial freedom needs preparation.

Get a new HEPA filter and breathe cleaner air while in bed.

I blogged about how I have a Sharp air purifier in my room even before the very bad haze experienced last year. What makes an air purifier works is really the HEPA filter that is inside.

"High-efficiency particulate air or HEPA is a type of air filter. HEPA filters are designed to target much smaller pollutants and particles." (Source: Wikipedia)

A HEPA filter.

Those who have a HEPA filter air purifier will know that the HEPA filter comes wrapped in a plastic bag and has to be installed in the machine. Once exposed to the environment, the filter has a lifespan of 2 years. It says so in the manual.

However, I have people tell me that they don't ever change the filter because the machine still works. Well, the machine could be working but the filter is probably degraded so badly that it no longer works to filter out harmful particles. In fact, it could be paying out harmful particles if it is badly degraded.

Anyway, if you own a HEPA filter air purifier and you have not changed the filter in 2 years or more, you might want to get it changed. Of course, you would have to clean the inside of the machine before installing the new filter too.

If you are still not convinced that the filter has to be changed, I changed mine today and here are the photos:

Old HEPA filter.

New HEPA filter.

The filters used to be available in Courts, Best Denki or Harvey Norman but they no longer stock them. I had to go to Sharp's Authorised Service Centre at Alexandra to get the filter. Not very convenient but it is worth the trouble to have clean air in my bedroom while I sleep:

Oh, it is cheaper to get a new HEPA filter than to buy a new air purifier, in case you are wondering. It costs just a bit more than $70 for the model of air purifier that I have.

This is not an advertorial.

This is just AK being kaypoh again.

Related post:
Protect ourselves from the haze while in bed.