By: musicwhiz I would say October 2008 was by far the most interesting month I had encountered in my three years plus of investing, and would include the most amount of volatility caused by Mr. Market’s manic mood swings. It’s amazing that regional bourses can have swings of 10-12% up and down in a day; it’s as if the underlying businesses were really changing on a daily basis to justify such strange behaviour ! Of course, we all know Mr. Market is having his manic moods again and pricing businesses as if they were going to go bankrupt the next day. In such an environment, he normally assigns a very low valuation for most businesses. In terms of opportunities, October 2008 was a great time for me to average down on the companies which I have been a shareholder of. I don’t think I’ve purchased this much since 2005 (before I started out on my value investing journey), and it felt like there were many bargains out there waiting to be picked up, assuming you had the cash and the holding power. Note that I do NOT advocate using leverage to purchase shares in companies, whether it be a bank loan or loan from loved ones, please purchase with additional savings and extra cash which you don’t need to touch for the next 3 to 5 years. During this month, I purchased more of Ezra, China Fishery, Boustead, Tat Hong and Swiber. The Excel sheet reflects the reduction in my purchase price (highlighted in blue) as a result of Mr. Market offering very attractive valuations for me to pick up on. Accordingly, my investment cost has increased from S$109,000 as at end-September 2008 to S$125,800 as at end-October 2008, an increase of about S$16,800. My last two purchases were as recent as yesterday when I picked up more of Tat Hong and Boustead. More details will be given when I review each company in my review below. Singapore has already reported being in a technical recession, and economists are predicting more “pain on the streets” when the recession hits Main Street and starts affecting the jobs and livelihoods of Singaporeans. Already retailers are anticipating a slowdown in sales and luxury car sales have dropped sharply. I personally have heard stories of people in financial trouble because they had borrowed heavily to fund share purchases and had to top up their margin call; and also of people in trouble because of retrenchments as they had a high-liability lifestyle. Always remember to have at least 6 to 9 months of cash for emergencies. Meanwhile, the economic crisis seems to have deepened with many countries about to fall into a deep and prolonged recession. Some countries like Iceland and Pakistan are on the verge of bankruptcy as their central banks do not have sufficient reserves to tide through the crisis. The USA Federal Reserve has already cut interest rates to 1%, so they would not have much room more to boost the stock market; while LIBOR rates have remained stubbornly high despite measures by G7 and worldwide governments to inject more liquidity into the global financial system. In the months to come, many businesses which have been choked of credit and which do not have sufficient operating cash inflows or cash reserves may fall and go bankrupt. To my knowledge, the companies I own should be able to withstand this unprecedented period of credit strain; but I remain cautious on their near-term outlook till more clarity emerges. Read more..