Yesterday was raining and very cool for Singapore weather. The stock market went through a roller-coaster ride. I saw the movement of some stock counters right before my eyes, dipping and then rising and then dipping again in the span of the afternoon.
Waking up this morning brought fresh air and relief and no madness of yesterday as I read the headline of The Straits Times – “US, Europe bourses soar after Fed cuts key interest rate”. It is about time.
The oversold positions of some stock markets were just simply overdone. The Hedge Funds can easily sell off their stocks and then buy them back at the cheap and made huge gains within hours. Not bad for making tidy profits BUT at the expense of the small investors or some struggling investment funds. The Hedge Funds strive on volatility of the stock markets.
If only the small investors can keep their nerves and not act yesterday and stay on the sideline, the losses may not be so severe. Like someone told me last night, it was a lesson in itself on what happened yesterday. If you have bought stocks with good business track records, then they will recover at some point from yesterday’s lows.
I believe that Cash is still king and it can pay for investments that are of value when prices have dropped to a reasonable level. Leverage or borrowing is always risky in a volatile stock market, especially when you are forced to liquidate your shareholdings because of negative equity.
Written on 8/18/2007 10:00 AM
Copyright © 2007, the author known as LKT in Singapore.
The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.