Thursday, April 15, 2010

First deserve, then desire

It's been a long while since I returned to CNA forum (I linked it up in my blog, near the header). I used to go there everyday in the past just to read some of the entertaining banter that goes there. I stopped around 1-2 yrs ago because there isn't anybody there anymore. So, it's a surprise to see that the activity over at cna forum is getting quite hot.

I also realised that more people are jumping into the market. Just yesterday, I looked in fascination at someone trading using the IG platform with a netbook on a bus. I looked at the time - it's 2153 - so he must be trading the US market. The netbook was still opened when he alighted the bus. Watching the prices ticking, I suppose.

People are definitely returning to the market, though not yet in droves. But the signs are there. I've been noticing more and more activity, especially of newbies, entering the market. People whipping up IPOs, chasing after dual-listing candidates, more stocks breaking 52 weeks high....heck, even STI broke through the 3000 mark yesterday with ease and high volume.

I believe one must deserve before desiring to win in the market. If newbies are whacking the market and boasting how easy it is to make money from their pickings, something is very wrong. The market works in such a way to funnel the money from the masses to few professionals. If anyone without an iota of technical nor fundamental knowledge also starts making big money, I think the party is going to end soon. Not without the customary fireworks, of course -  the climatic grand finale so typical of bull runs.

"Are we there yet? Are we there yet?", the donkey in Shrek kept asking. I don't think so. I'm just waiting for the newspaper headlines to say that we've reached a new high or something. Bulls always climb higher up a wall of worry, I guess.

What's my action plan? I've cashed out quite a few positions that I've no intention to keep and getting ready for a near term correction to buy up some bargains if any. If there's no correction, so be it. I'm not going to let the market control my mood. Definitely no seller's remorse for me.


Createwealth8888 said...

Every market participant thinks that he/she deserve it; otherwise, they won't be in the market.

Musicwhiz said...

An astute observation. I've noticed this myself - everyone seems so excited about the market they can hardly rein in their enthusiasm. I frown upon such a blatant display of exuberance.

All this means valuations will be pushed higher and higher, that's all. Less margin of safety.

And so the cycle continues. It seems (to me at least) that it's not very safe to enter the market at this stage as valuations are going from fair (back in early 2010) to slightly expensive (for certain companies now in April 2010). And that's when we are not even certain of the economic recovery and its "green shoots" spreading to all industries.


la papillion said...


That is true. I'm saying if a new entrant starts to make money thinking that he is skilled, then we're near the end of the party.

Do we see that yet? I don't think so. I just see more people entering the market.

la papillion said...

Hi mw,

Haha, we just need to know what we need to do when the market is acting happy :) You can sell some or just refuse to buy and participate in the madness :)

Createwealth8888 said...

Don't be 1st or 2nd Little Pig or Chicken when the Bull is boiling red hot!

Be the 3rd Little Pig.

Only the third and oldest pig has learned to behave in accordance with the reality of stock market principle.

FF said...

Hi LP,

You just wrote about something that has been on my mind for the past few days.

I have been wondering whether it is time to sell and was worried that I might get seller's remorse, as you so put it.

I just feel that the stock market seems to have recovered quite a fair bit already. I was also thinking that by end of the year, I would perhaps want to trim down my stock portfolio by 50% and for 2011 perhaps to 80%.

This will give me opportunity funds to buy into the stock market during the next dip.

la papillion said...

Hi FF,

If you're thinking about it, maybe you should heed it. Take a small part out, not such a bad idea. At least you'll sleep soundly.

GS in big shit now. Monday will have a big show :)