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!