Monday, 13 October 2014

The Time Has Finally Arrived?

Last few trading days were disaster for many stock market investors. Some took profit and wait for opportunity, some cut loss to protect their capital, some hold their stocks tight despite loss or massively shrunken paper profit, some went in to try their luck.

From the peak in July at around 1890 points, KLCI has dropped to 1797 points today. It is about 100 points drop but by percentage, it is a merely 5% drop.

Nevertheless, this is enough to see blood everywhere on the trading floor.

There is no doubt a correction is in the making. Whether it is a minor or major correction, or a bear arrival is still remain to be seen.

By definition, an entry to bear market is represented by a drop of at least 20% in indices over at least 2 months. 

This 20% is just an entry to bear market. So when the bear takes charge, the drop can be much more than that.

Just look at how much damage current 5% drop so far has done to your portfolio. Can you imagine the time when the market drop 30% to 50%?

       Small or Big one?

Of course I am not exempted from being wounded. I did not do any transaction when the market started to head south in October, apart from adding Huayang before the big drop.

The table below shows how my portfolio was affected so far. For those who suffer the same fate as me, hopefully you can be consoled a little bit after looking at my portfolio's performance.

30 Sep 13 Oct Loss (%)
GTRONIC 4.68 4.08 12.8
HUAYANG 2.34 2.16 7.7
INARI 3.23 2.65 18.0
LATITUD 3.80 3.72 2.1
MATRIX 3.25 2.86 12.0
SCIENTX 7.44 7.16 3.8
TAMBUN 2.57 2.15 16.3
YOCB 1.02 0.995 2.5

Two of my heavyweight holdings Inari (-18%) and Tambun (-16.3%) fell the most. Luckily Latitude still manage to hang on well, so far.

The magnitude of decline in Matrix (-12%) actually breaks my glasses a bit...

I dare not calculate precisely how many percentage of overall loss so far in October. Just stay tune on the first of November for this "spectacular" portfolio review.

Actually I'm not too worried so far, as overall I'm still in green this year.

The most painful thing to swallow is the lack of cash to shop around in this period of time. Worse still, I might be forced to sell shares just to meet my anticipated extra expenses this month!

People might say that why don't you sell all those shares, keep the cash and buy back at much cheaper price later. 

One of my sell criteria is "when bear market arrive". However, I can't be sure whether the bear is around the corner, as KLCI only drops 5%.

To mark an entry into a bear market, KLCI have to fall below 1500 points. Looks like it is still a long way to go. Investors should have a plan of what action to take now.

I don't think "Cold Eye" and Warren Buffet will sell during a bad market. Am I right?

If I can time the market with confidence, I will sell. However, I can't do it at this stage.

I do not make the decision recklessly. Whatever I do, I will take full responsibility. 

No matter what is the outcome, there will be new experience and lesson learned.


  1. Suggestion: sell latitud buy others u deem cheaper shares depends on how many volume u hav.
    For my case, i hav sell som stocks which gain little or loss little so that i hav cash for what u says mega sale. I think warren would do that .
    However depend on ur cash position. I sell to buy so that my balance cash to investment remain 30:70. In three yrs time my profit will be huge gain instead of following the market with little gain.

  2. When time like this, the bull has run for too long too high.
    The adjustment will be severe. This is just a beginning for a more severe down trend.
    Protecting your gain/capital, exit the market when there is a rebound.

    The share price is just an illusion, all will go down in Bear market, big cap or small cap.

  3. Ewe, Ho, KC & wachxe, thanks for all your opinion & suggestion.

  4. Really a bad shape now since it was too fast within 7 trading days. Just take INARI as example. Today closed at rm 2.22, it was traded about rm 2.22 since 17/3/2014. Here are my questions or doubts: 1) If you are the key player or long term investor, will you support or push up the share price so who bought above rm 2.22 to cut loss or cash out? 2) If you bought it lower than rm 2.22, will you think about sell now and buy back later?? Market is EQ game, people will react differently. So be careful my friend, anyway I really enjoy and respect your ( Bursa_Dummy ) blog with good quality, professional etc, cheers.

    1. Thanks Yap. Sell & buy back at lower price will be the ideal scenario in a falling market, even for long term investors. No one can tell you right or wrong to buy or sell at this moment...

  5. Bursa D,
    R u selling some to preserve cash or accumulating mode (real investor) ? Dilemma now watching all the profits burned..

    1. If I were to know that the market will fall this much in early Oct, no doubt I will sell all the shares earlier... If u still have lots of cash, I think it's OK not to sell and wait for opportunity to accumulate more good shares.

      For me, I haven't sold shares so far, just manage to squeeze out some cash from somewhere else and wait :)

    2. I thought as implied in the title of this post, you are expecting this to come?

      The last time we had such big drop, was in 2011 when KLCI drop 200 points in 3 months. Month to date, KLCI only drop 78 points, only half of 2011's correction. Will we see more to come?

    3. The title actually means: after bull market for such a long period, bear finally comes. I expect it to come but won't know the timing :)

      I don't see any real bad news other than fear. Hopefully it's a small bear.

  6. Hi Bursa D, thanks for your valuable sharing. I really enjoy all the articles in your blog..
    What are the good shares that you plan to accumulate?

    1. Thanks Chau for you good words. I will probably add the shares of those stocks already in my portfolio and my watchlist.