it has been quite some time since I last updated my blog, was busy looking for a job... I resigned before Lehman Bros collapsed in Sep 2008, honestly speaking, I would not have resigned if the financial crisis hits earlier, anyway, I have got a new job and started few weeks ago, brand new start :)
while I was not working, I witnessed the dramas in stock markets, few hundred points a day for Dow, few thousand points a day for Hang Seng. It was a great experience and at times, I think it was a blessing in disguise that I was free during the craziest times so that I can witness the VERY FIRST big bear market in my life.
Lots of people got the honey from the bear, I got some too but not a lot. What I did in the past few months was:
#1 Sold some of the weaker stocks and move to the stable quality blue chips (in Chinese, we call it “Change Horse”) – trust me, this works. I sold a weak Malaysian telco stocks at $ 4.58 and changed to a very stable Malaysian bank in Oct 2008 and now the telco’s price is $3.20 while the bank’s price has gone up (slightly up, but at least it is paper gain).
#2 Keep or buy more of the strong stocks in my portfolio – for those quality stocks, I will not sell in a bear market, in fact, I have bought more shares at lower price. I am sure I will be rewarded in long run.
#3 Keep putting money in Unit Trust gradually – I still put few hundred Ringgit each month into the Unit Trust I invest in. It is not the best thing in the world to see your portfolio value shrinks in the bear market but it is definitely very upset to see your portfolio remain the same in the upcoming bull market… therefore I will not stop buying in bear market.
#3 Hunt for “High Cash, Low Debt” – I read lots of articles and forums, most if not all are in the hunt for companies with lots of cash, low or zero debt. In times like this, only those who hold cash can survive, just like the big 3 Autos in US, only Ford is still doing okay and does not need help from government coz she is holding some cash to weather the storm. Some analysts in US mentioned a few stocks with lots of cash and low/zero debt: Apple, Exxonmobil, Cisco, etc.
#4 Hunt for NTA higher than stock price – NTA is Net Tangible Asset, there are believers (I am one of them) who buy the stocks if the stock price is lower than the NTA per share – it is somehow believed that the stock price will eventually go up to match the NTA per share.
#5 Gold – I sold some of my holding when Gold touched USD 900+ in Sep08 but I still keep some. The problem I have for Gold is, there is no interest no dividend or whatsoever return when you hold it, the only thing you can hope for is the price to go up and make capital gain. Lots of people claim that Gold is the safe haven but to me, yeah I agree it will sort of protect the capital but I will rather go for some super blue chips – at least while holding the stocks, I can enjoy some dividend and the share price will not fluctuate too much (having said that, some super blue chips are having roller coaster’s ride these few months). Well, Gold is still in my portfolio but not more than 10% of my total investment.
#6 Real Estate – I thought the financial crisis will allow me to buy some apartment at low price but to my surprise, no desperate sellers and therefore no cheap apartment. My agent told me lots of owners in prime locations are not in a rush to sell the apartment because they either bought the apartment with cash or they have rental every month. Well, maybe Malaysia’s property market is really resilient. What about the properties in the U.K.? It has dropped quite a bit and GBP also dropped more than 25% (against MYR, it was GBP 1= MYR 7 in 2004 and now GBP 1 = MYR 5.10)…
Most of the people are still in fear… I am sure you have heard of the quote “Be fearful when others are greedy and be greedy when others are fearful”.
How many people can really do that?
I have to confess I was not strong enough / experience enough to do it – on 27 Oct 2008, I was in a café with my friend, Hang Seng index dropped like crazy to below 11,000 – the lowest it hit was 10,676… I witnessed that, all the stocks in my watch-list are in negative territory. I did not become greedy, I became a bit fearful – I was thinking:” let’s wait for Hang Seng to break 10,000 and I shall buy when it hits 9,000 or 8,000.
You know what, ever since 27 Oct 2008, Hang Seng went up more than 40% to hit around 15,000+, of course recently it has gone down to the range of 12,000 – 13,000.
If I continue to think like that – I will not buy when Hang Seng hits 8,000 coz I will be telling myself to wait for 6,000 then only I will buy.
This is a very good lesson – at least I found out that I was fearful when others were fearful. Since then I learned my lesson well and start to fine-tune my investment strategy. I am not saying that I am the expert now but at least I am slowly improving.
Are you ready to be greedy when others are fearful? Try, it’s fun, especially when you’re rewarded with your "anti-crowd" strategy.
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