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It was reported last week that Temasek Holdings had divested all of its holding in Bank of America (BoA) in the first quater of this year and could have lost at least US$2.3 billion. Perhaps it is due to the change in Temasek’s investment objectives from developed markets to emerging markets. Or perhaps due to the different business stucture of BoA from Merill Lynch which Temasek had originally invested in.
I am not an economist or analyst, so I shall reserve my speculation. However, what we do know is that Temasek first invested into Merrill Lynch in late 2007, which was when the crisis was just unfolding and markets were still trading at the highs (as compared to current levels). And when they liquidated their holdings the last quater, March 2009 was the lows we have seen so far in the crisis. This brings to mind the trading pattern of many retail investors.
Of course it is difficult to predict where the market will be, and only after the highs or lows have been formed, then we can look back and say a top or bottom has been formed. Therefore, we cannot fault one for his entry level as high can go higher, and low can go lower. However, one do have control over how much he can lose. Investors often, for the fear of losses, hold on to their bad positions longer than they should. And when the pain becomes unbearable that they have to cut, its at the worst levels before market reverse like when Temasek sold BoA just before the market rallied sharply in the 2nd quarter. A successful trader should have in mind how much losses he is willing to take when he initiates his position so that he will not be unprepared when market turn against him. Only when you know your potential losses, then you can act to preserve your capital and fine-tune your trading to grow your account.
Source: TheMidnightStar[caption id="attachment_2491" align="alignright" width="150" caption="Photo by kwerfeldein"][/caption]
It was reported last week that Temasek Holdings had divested all of its holding in Bank of America (BoA) in the first quater of this year and could have lost at least US$2.3 billion. Perhaps it is due to the change in Temasek’s investment objectives from developed markets to emerging markets. Or perhaps due to the different business stucture of BoA from Merill Lynch which Temasek had originally invested in.
I am not an economist or analyst, so I shall reserve my speculation. However, what we do know is that Temasek first invested into Merrill Lynch in late 2007, which was when the crisis was just unfolding and markets were still trading at the highs (as compared to current levels). And when they liquidated their holdings the last quater, March 2009 was the lows we have seen so far in the crisis. This brings to mind the trading pattern of many retail investors.
Of course it is difficult to predict where the market will be, and only after the highs or lows have been formed, then we can look back and say a top or bottom has been formed. Therefore, we cannot fault one for his entry level as high can go higher, and low can go lower. However, one do have control over how much he can lose. Investors often, for the fear of losses, hold on to their bad positions longer than they should. And when the pain becomes unbearable that they have to cut, its at the worst levels before market reverse like when Temasek sold BoA just before the market rallied sharply in the 2nd quarter. A successful trader should have in mind how much losses he is willing to take when he initiates his position so that he will not be unprepared when market turn against him. Only when you know your potential losses, then you can act to preserve your capital and fine-tune your trading to grow your account.
Source: TheMidnightStar
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It was reported last week that Temasek Holdings had divested all of its holding in Bank of America (BoA) in the first quater of this year and could have lost at least US$2.3 billion. Perhaps it is due to the change in Temasek’s investment objectives from developed markets to emerging markets. Or perhaps due to the different business stucture of BoA from Merill Lynch which Temasek had originally invested in.
I am not an economist or analyst, so I shall reserve my speculation. However, what we do know is that Temasek first invested into Merrill Lynch in late 2007, which was when the crisis was just unfolding and markets were still trading at the highs (as compared to current levels). And when they liquidated their holdings the last quater, March 2009 was the lows we have seen so far in the crisis. This brings to mind the trading pattern of many retail investors.
Of course it is difficult to predict where the market will be, and only after the highs or lows have been formed, then we can look back and say a top or bottom has been formed. Therefore, we cannot fault one for his entry level as high can go higher, and low can go lower. However, one do have control over how much he can lose. Investors often, for the fear of losses, hold on to their bad positions longer than they should. And when the pain becomes unbearable that they have to cut, its at the worst levels before market reverse like when Temasek sold BoA just before the market rallied sharply in the 2nd quarter. A successful trader should have in mind how much losses he is willing to take when he initiates his position so that he will not be unprepared when market turn against him. Only when you know your potential losses, then you can act to preserve your capital and fine-tune your trading to grow your account.
Source: TheMidnightStar
