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What are investors to do in a downtrend?
By A Singaporean Stockmarket Investor (ASSI)  •  May 9, 2010
[caption id="attachment_1812" align="alignright" width="150" caption="Photo by kalandrakas"]Photo by kalandrakas[/caption] I am a long only investor. I do not short the market. The blogmaster of Time to Huat has taken pains to explain to me that short sellers are necessary in the market. I understand the theory but I am still a long only investor. Using CapitaMalls Asia as a case study, I am reminding myself of what I should be doing and hope that this post is useful to other like minded investors. I stopped buying at supports upon realising that CapitaMalls Asia is in an obvious downtrend a while back. Every single bullish reversal signal has failed so far. It cannot get more bearish than this. I like the fundamentals of the company. I like the fact that it is in a nett cash position. Although as investors we want to exploit the discrepancy between price and value and buy undervalued stocks, we should do so when the time is right. This is only possible when we combine FA with TA. Buying at supports in an uptrend is the way to go. When the trend is clearly down, what we should do is to wait and see if the next support level holds up. We should look out for signs of a basing process. CapitaMalls Asia is clearly still in decline and I would not add to my position in such an instance. It has yet to start basing. What we have to realise is that after suffering for more than a year, the tide has clearly turned in favour of the bears. This might be momentary or prolonged. It is futile to wonder how long this phase will last. What matters is to have the correct mentaility which is to stay pragmatic and not be too bullish or bearish. Read more...
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By A Singaporean Stockmarket Investor (ASSI)
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