Another volatile week in the market. At the start of the week, the STI suffered is biggest one day fall since October 1987, plunging 6%. However at the end of the week, the STI together with the rest of the market recovered, aided by the Fed's interest rate cut and the quick approval to the stimulus package. The STI closed at 3,159.48 above the physiological 3000 point mark. Our local papers have been publishing articles on how to deal with the market volatility. Here's our own bloggers' views on Mr. Market. Mr Market and the ice-cream machine By: Jay Global stock markets are technically in a bearish mode, defined as falling 20% below the previous peak. The other well-known technical indicator is 2 consecutive quarters of negative GDP growth equals recession. Guess most pple know this one right? In this kind of market, it is natural that most participants feel very down. Especially those who don't have a clue about stocks, trading, investing and entered the markets hoping to make a quick buck bcos their friends/colleagues did just that. Or maybe they heard stories of how pple made quick bucks buying COSCO, hold it for a few weeks and made a couple thousand dollars. Well, now the stories become how pple loss 50% of their portfolio in one month and in absolute terms translate to $15,000-$30,000. They are in so much pain that they cannot eat, cannot sleep, don't want to hear anyone mention sto.., sorry you are not allowed to finish the word. Ok, if you know any of these people, ask them to come here and this blogger shall play Uncle Agony today. Read more... Enduring Volatility - Dealing with Mr. Market's Mood Swings By: musicwhiz Of late, the stock market has been experiencing wild volatility. Experts (those who study stock market theories such as EMH) say that this means risks have correspondingly increased because after all, volatility equates risk, doesn't it ? For value investing, risk has a totally different definition: that of permanent loss in the value of your holdings. Thus, true investors do not equate volatility with risk; instead, they see it as golden opportunities to purchase part-ownership in companies with strong, stable earnings at fire-sale prices. Volatility should be embraced as a friend of the value investor, because it periodically under-prices companies so ridiculously that they almost beg to be bought ! Benjamin Graham (the father of value investing) wrote in this book "The Intelligent Investor" Page 203 that investors who "permit themselves to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage". Read more... Market Turmoil, Mental Turmoil By: Patrick Lim The first principle is NEVER, NEVER, NEVER even attempt to indulge in speculation into any form of investments. And worse, borrow or leverage (one of these is equity margin financing) to speculate and consumers should bear in mind they can earn themselves a guaranteed 24% return by not rolling over their credit card balances but by paying the full amount either on or before the due date. Secondly, just ponder over this: NO life insurance product except a disability income plan will cover depression and according to Mr Paul Hughes of Aviva who said this is not provided for in the land down under. On this point and on the probability of admitting claims (for depression) should the turmoil persist, I was just thinking to myself on whether the insurers here should even resort to withdrawing this benefit from both Aviva's Ideal Income and Great Eastern Life's paysecure. I sincerely hope not but this is a possibility that should never be ruled out. Read more...