Monday, March 10, 2008

KLSE meltdown

It is not fun holding stocks that got battered in the Kuala Lumpur Stock Exchange meltdown today, March 10. From Friday’s close of 1,296.33 points, the KL Composite Index fell to 1,166.70 points, representing a fall of ten percent or 129.63 points, in the early afternoon session which triggered the circuit breaker. All stock trading was suspended for an hour. It was the first time since implementation that the circuit was broken. Hope the second and subsequent times the usage of the circuit breaker will be for KLSE daily rallies of ten percent or more.

When the stock market reopened an hour later, the KLCI dipped another 9 points before bargain hunting or shoring up of prices set in. The KLCI closed at 1,173.22, a plunge of 123 points or 9.5%. That was nothing compared to some government linked counters and low liners which went limit down(s) – 30% and more.

One of my favorite GLC stock almost reached my targeted buyback price set last July. At the time others scoff at my suggestion, arguing that the government would not allow such a horrendous fall of 60% to happen. And that many investors would have gone bankrupt if it happens. Well, I do not know how many have gone or will go bankrupt but if investors have sufficient holding power, stock prices will recover after hitting rock bottom. It is just a matter of time for prices of good and fundamental sound stocks to recover from internal and external shocks.

However take note that the KLSE has today joined other Asian stock markets in technical bear territory. Since the intraday high of 1,524.69 points reached on January 14, 2008, the KLCI had fallen by more than 20% to the intraday low of 1,157.47 today. A fall of 24% in blue chips prices within two months is heartrending to any investor.

The stock analysts who had clamored for buys, the ‘sifus’ and ‘ShenXian’ have all gone quiet, the diehards and ‘professionals’ continue to shift their targets based on hindsight. No surprise since I have seen it all before over the decades. Who does not know how to recommend stocks and make money in a bull market? But the blame starts to pour in when markets or stocks tumble.

That is why I do not recommend individual stocks to readers, here or elsewhere. I just tell readers what I would do based on the Yi chart and prognostications hoping that they too can catch the right timing to buy or sell stocks. Making money in the stock market will prove difficult in 2008 if you have already lost a large part of your capital.

In case some readers want to know, I am still using excess ‘foreign’ capital for the trades, a reason why I follow the Yi. And no, I have not bought back any stocks today. Perhaps waiting for better bargains?

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