Some Investing Pointers
1) Out of the blue - When someone ask you about a stock "out of the blue" (just like simon-alibaba below), gotta be suspicious. Especially if its a stock not on everybody's lips. Especially if its from someone who does not play stocks often as their sources have a higher hit rate.
2) Opening lower on huge volume - Look at MBf Corp today, top volume stock with a closing price yesterday of 21 sen. The stock opened at 16 sen and reached a high of 18.5 sen. You don't even have go looking for news, a stock that opens much lower on good volume, you can forget about bottom fishing. Its a very poor bet to buy now. Most investors have a big drawback, and that is Good Recent Memory, Poor Long Term Memory. Recent memory means we make recent experiences as a reference point - i.e. we are aware MBf Corp has risen and traded above 20-22 sen for the past few days, hence a pullback to 16 sen. looks bloody attractive. Poor Long Term Memory, sigh, remember 1997, ok too far back, were you aware that MBf Corp spent a long time around 10-12 sen with volumes being collected over the last 8 months, go back and check the charts. Nobody will sell you so much lower for no good reason.
3) Sporadic Shifting Themes - Yes, we are in a bull market, but you can easily spot weakness when players are rotating from one type of counters to another day by day. If the switching is rapid, it indicates weakness. For example, the market when breaching 1,050 was a bit shaky, and there was some sell off in plantations but undertone was still strong and players switch from counter to counter with no strong theme - when there is no strong theme but undertone is still firm, most players will look for leads in the newspapers - when that happens, we should withdraw and not join in. Looking for leads from newspapers is like going to Lucky Garden morning market and listening to the vegetable seller for tip of the day.
4) Judging strength of bull market - Again, look at the themes. There must be some themes you can quickly come up with. If you can't, then there is little strength left. Now, everybody can rattle off things like Plantations, M&A activity, GLCs being merged for efficiency and economies of scale, more openess with Bank Negara/ANZ, stronger ringgit/weaker USD and funds leaving more established exchanges in favour of Asian bourses. Plus a very mix of speckies and solids on the top 20 volume like now. Remember the market at 950-960, almost 90% are speckies and that is only a trading market (means have to cut swiftly on any signs of weakesness).
1) Out of the blue - When someone ask you about a stock "out of the blue" (just like simon-alibaba below), gotta be suspicious. Especially if its a stock not on everybody's lips. Especially if its from someone who does not play stocks often as their sources have a higher hit rate.
2) Opening lower on huge volume - Look at MBf Corp today, top volume stock with a closing price yesterday of 21 sen. The stock opened at 16 sen and reached a high of 18.5 sen. You don't even have go looking for news, a stock that opens much lower on good volume, you can forget about bottom fishing. Its a very poor bet to buy now. Most investors have a big drawback, and that is Good Recent Memory, Poor Long Term Memory. Recent memory means we make recent experiences as a reference point - i.e. we are aware MBf Corp has risen and traded above 20-22 sen for the past few days, hence a pullback to 16 sen. looks bloody attractive. Poor Long Term Memory, sigh, remember 1997, ok too far back, were you aware that MBf Corp spent a long time around 10-12 sen with volumes being collected over the last 8 months, go back and check the charts. Nobody will sell you so much lower for no good reason.
3) Sporadic Shifting Themes - Yes, we are in a bull market, but you can easily spot weakness when players are rotating from one type of counters to another day by day. If the switching is rapid, it indicates weakness. For example, the market when breaching 1,050 was a bit shaky, and there was some sell off in plantations but undertone was still strong and players switch from counter to counter with no strong theme - when there is no strong theme but undertone is still firm, most players will look for leads in the newspapers - when that happens, we should withdraw and not join in. Looking for leads from newspapers is like going to Lucky Garden morning market and listening to the vegetable seller for tip of the day.
4) Judging strength of bull market - Again, look at the themes. There must be some themes you can quickly come up with. If you can't, then there is little strength left. Now, everybody can rattle off things like Plantations, M&A activity, GLCs being merged for efficiency and economies of scale, more openess with Bank Negara/ANZ, stronger ringgit/weaker USD and funds leaving more established exchanges in favour of Asian bourses. Plus a very mix of speckies and solids on the top 20 volume like now. Remember the market at 950-960, almost 90% are speckies and that is only a trading market (means have to cut swiftly on any signs of weakesness).
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