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| Wednesday, August 29, 2007 |
| My take on the situation |
Just as things start to recover, we are dealt with another subprime issue. Today we will see a sea of red, thats for sure. But I feel this is only temporary. Why do I say that?
1. Contra players might be flushed out
What this means that forced selling might be lesser this time round thus it would not force the price down as drastically as before.
2. Redemptions of funds is not as drastic as compared to a few weeks ago
Compared to a few weeks ago, this time round, what has been withdrawn has already been withdrawn. Think about it, past few weeks, the subprime scare is as bad as it is today. So those who still have money kept in funds are those who can't be bothered or those who are in it for the longer term, shrugging this incident as a small correction. So this time round, again, forced selling due to redemption will be reduced.
3. Retailers who are vested recently are aware of the situation
After the first drop, those who are vested recently are aware of the situation as there are no indication that the subprime issue is resolved, despite attempts to contain it. So now, those who are most probably holders rather than punters, especially at supported prices in the recent drop. This acts like a typical consolidation phase whereby the knowledgeable and well-informed are collecting from the ill-informed investors/speculators. Thus, what you see is that these are the people who might do bargain hunting.
I personally feel that, before the correction/possible-crash, the price reference is at its peak. However, after the first correction, those that base prices on the peak has already cut-loss, gain profit or decided to wait it out. After hitting the bottom, those that support the price will take this as a reference. Thus, price drops from now would be unlikely to fall way beyond the trough of the correction.
Anyway, in conclusion, from the recovery I observe, I understand that people vested in Singapore stocks knew that they over-reacted and thus buy back when presented the opportunity. These are in fact THE stocks that will go up when things settle. |
posted by Nenix @ 8:20 AM   |
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| NenixDreams Fund |
| Fund launchprice on 1st August 2006= $1
Target for 2007 = Beat STI index
Current price of NDF as of 1st Oct 2007 = $1.58
Current price of STI as of 1st Oct 2007 = $1.54
Difference with STI index is 0.04
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