Bullish sentimentVolatile market
Due to the US sub-prime mortgage crisis this year, the market turned bearish for a while. And then the Fed decided to cut interest rates to try to remedy the market causing investors to turn bullish for a moment. Thinking that it's all over? The media decided to add in some bad news and occasionally some good news to enlighten the market of their current situation(it stimulates their income as they sell more papers too!). This brings investors on a roller coaster ride. Weeee! Woooo! Ahhhh...............!
Due to the US sub-prime mortgage crisis this year, the market turned bearish for a while. And then the Fed decided to cut interest rates to try to remedy the market causing investors to turn bullish for a moment. Thinking that it's all over? The media decided to add in some bad news and occasionally some good news to enlighten the market of their current situation(it stimulates their income as they sell more papers too!). This brings investors on a roller coaster ride. Weeee! Woooo! Ahhhh...............!
Bearish sentimentNewbie
In terms of experience, I'm still a newbie as I have only started investing early this year with real cash. However, my investing mindset does not put me in a newbie position. I'm value orientated while most are in it for a quick profit. I've been eagerly reading up investment books for the past 2 years which taught me to invest for the long term and not speculate. I also learnt to analyse financial statements to make good investment decisions.
If you noticed, most decent company stocks especially small caps increased 1-2 times from the start of the year. Some stocks have even rose 6 times their initial price! No wonder those aunties, uncles and Ah Dis(young boy, like me) are bragging about their investment profits. It is easy to make money in a bull market as most stocks will rise(like how hot air rises) and not much skill is required. One can make some profit by throwing darts to pick stocks. However when you are in a bear market, its a different story. Newbies will panic when prices start to drop fast. One of the irrational things they do would be to follow the herd and sell at a loss. Worst still if they used leverage like contra or margin, their losses would be higher.
The bull climbs up the stairs of the building while the bear jumps out of the window.
As a value investor, if the fundamentals of the company does not change and the price is cheaper now, I would increase my positions.
Conclusion
It's time that newbies learn a lesson not to speculate and look for hot stock tips. They should do their own research before buying. In the long run, they would do reasonably well provided that they don't buy at rocket prices. Whether they can beat the market in the long run is another story.
In terms of experience, I'm still a newbie as I have only started investing early this year with real cash. However, my investing mindset does not put me in a newbie position. I'm value orientated while most are in it for a quick profit. I've been eagerly reading up investment books for the past 2 years which taught me to invest for the long term and not speculate. I also learnt to analyse financial statements to make good investment decisions.
If you noticed, most decent company stocks especially small caps increased 1-2 times from the start of the year. Some stocks have even rose 6 times their initial price! No wonder those aunties, uncles and Ah Dis(young boy, like me) are bragging about their investment profits. It is easy to make money in a bull market as most stocks will rise(like how hot air rises) and not much skill is required. One can make some profit by throwing darts to pick stocks. However when you are in a bear market, its a different story. Newbies will panic when prices start to drop fast. One of the irrational things they do would be to follow the herd and sell at a loss. Worst still if they used leverage like contra or margin, their losses would be higher.
The bull climbs up the stairs of the building while the bear jumps out of the window.
As a value investor, if the fundamentals of the company does not change and the price is cheaper now, I would increase my positions.
Conclusion
It's time that newbies learn a lesson not to speculate and look for hot stock tips. They should do their own research before buying. In the long run, they would do reasonably well provided that they don't buy at rocket prices. Whether they can beat the market in the long run is another story.
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