|30 Sep||13 Oct||Loss (%)|
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%?
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.
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.