MRCB or ARMADA and Market Volatility

I have some fund available for investing following my failure to secure Armada IPO last month. Instead of keeping it in some unit trust accounts, I have decided to see how the market performs with regards to Armada. It does not seem to come down, in fact it is going up gradually defying analysts' prediction of its fair value being about 3.92. Instead it goes up to 4.20. I am not about to put my money in this overvalued stock. So I wait.

My oh My!

Then that precipitous fall at New York stock market occurs on 5 Aug, DJI index declines by over 500 points, the single largest dip since 2008, and followed by other world markets the following Monday 8 Aug; Malaysian stock exchange is no different.I note an ocean of red with many favourite stocks which were making gains the week before falling by as much as 15%. I see Armada goes down to 3.80 and another stock, MRCB which I am monitoring falls from 2.55 to 2.16. I am debating which one, Armada or MRCB that I want to acquire. I read about the market not likely to recover in the short term, I read about when one goes bottom-fishing and I read all about the gloom surrounding most markets and so I waited.

Bumi Armada

Then market suddenly rallies on 10 Aug based on the Feds promise to keep interest rate to almost zero for two years and everywhere the stocks return to black! (Re: my last posting on Back to Black :D). After doing some simple calculation on stock yields, I decided on 10 Aug to get those MRCB shares which opened at  2.16 on Monday but has climbed back to 2.20. Well I thought I was not going to wait any longer, just close my eyes and told my remisier to queue for that price and I got them in less than 20 minutes... Gosh some guys really wanted to dispose of those shares! I just hope my luck holds out, in this volatile period one is supposed to focus on capital preservation and not going headlong into investing but remember no risk, no gain!

The next day, 11 Aug Thursday, MRCB along with other stocks fell again ( following Wall Street of course the evening before) and this time based on remarks about Germany's and France's exposure to down-rated Spanish and Italian bonds... Ghee, what else could be there that are going to affect the market? I know the British riots do not affect it, I supposed when China, US or the economic giants of Europe cough, we will all be sneezing as well ( a cliché I know). And so I saw the value of my MRCB stock went down to 2.09 overnight. Immediately I rang up Jenny my stock broker to buy additional MRCB shares at 2.10 to dollar cost average. But she never rang me back as the robust stock held up at 2.20.

Angela Merkel  and Sarkozy - a Powerful Pair

World markets return to black on 12 July following Wall Street overnight recovery after Angela Merkel the German Chancellor and Sarkorzy, the French President indicated  that they would get together to discuss the eurozone debt and that their exposure to Spanish and Italian bad debt is not critical. And so my MRCB shares return to 2.23 as for now.

What a historic week for stock markets around the world!  After a week of the most volatile trading sessions since the global financial crisis, the Dow Jones rose 423 points yesterday, but it remained 301 points in the red ahead of this Friday's session .Morgan Stanley Smith Barney vice-president Fabiola Gibson told the Australian online that "The difficulty in a market like this is that no one has time to think. In a market like this you need nerves of steel."

This extreme volatility tends to erode investors' sentiment towards equities and  no wonder everybody is buying gold pushing the price of the metal at an all time high.

Well for the small time retail investor like most of us "the nerves of steel" is an option for people who find investing challenging where gaining and losing is part of the game. Just sit back and relax!

Stock Market - An Ocean of RED and Back to BLACK

Since early this year I have been following news on the world's financial health especially the recently protracted partisan haggling in raising American debt ceiling. Their Congress managed to resolve the impasse just hours before default on 2 Aug 2011 much to the relief of the financial world. Most of the writings point to another possible GFC2 (global financial crisis). Things have been further confounded by  Europe's sovereign debt crisis which seems to have defied remedies and threatens more euro-zone economies.

Like most investors, I am worried , yet  I hesitated to offload some of my stocks  early last week. My hesitation does make a poor investor out of me. The intransigence was an opportunity lost. Despite being a small-time market player for quite some time, I must admit I am no savvy investor. I have created wealth no doubt but not as much as it should had I been more decisive and less greedy ... ooops!

Last evening saw the worst Wall Street sell-offs in two years. The world has seen it coming. Investors just fled the market on news of American worsening economic data and the failure of the stimulus packages to spur her economic growth. The Dow Jones Industrial Index was down by more than 500 points. I foresaw an ocean of red in our own stock market the next day which is today and as sure as the sun rising from the east, the ocean of red stares at me from the screen of my computer when market opens.

Market free falls at New York Stock Exchange Aug 4 2011 (WSJ)

Ocean of RED at Bursa Top Volume Aug 5 2011

Following the DJI steepest decline since 2008 yesterday, panic selloffs also hit other Asian stockmarkets . And the Australian stock market wiped off nearly AUD56b this morning. It seems that it is a natural reaction for most investors to panic and convert  what they have got in the market around time like this to cash and someone has made a remark that if this was the favoured technique, it should have been done before the crash!

It is envisaged that markets will continue to be tough for the next couple of months in the absence of any short-term resolutions of prevailing macroeconomic issues and investors have been advised to balance up the need for return with the absolute need to preserve their capital. It is not the time for borrowing and investing.

The Present Cliche - Credit The STAR

Well, for people who have the fund to spare for the longer term (one or two years?), it is the time to buy up those battered down stocks and wait for them to come back to black for long-term gains, reminds me of the popular song of the same name by the late and tragic British singer and composer Amy Winehouse.

Amy Winehouse-RIP

Savvy and lucky investors would have capitalised on this large hiccup in the market. As for me I tend to be wise after the event..... rather unfortunately.

Just as well I am still hanging on to my precious money and not silly enough to buy the coveted Armada shares last week, the price was rather low this morning since its launching on 28 July 2011. Time to buy I guess.. no, no, just let me wait a little bit longer as Armada's trading is in USD and I note that the greenback is weakening..... Typical me I would say. By the time I decide it would have been Back to Black.