Today, 1,105 counters fell. only 111 gained. 227 remain unchanged.
The sentiment of the market is really bad.
You can probably “feel” it since early this year. No catalyst. No excitement. Boring market.
Technical perspective
If we look at the KLCI Index, it went up in Dec 2017 on the “window dressing effect“, then sideways after the volatility caused by Dow Jones Index plunges (see red circle in Figure 1). Dow Jones fell more than 1,000 points twice in a week on the concern over rising interest rate, wages and inflation growth rate).
Figure 1
And today, it broke the sideways trend and go south by dropping 34.84 points. This was mainly due to the Trade War that is happening between US and China which created the panic.
So, how bad is your portfolio affected?
Usually, investors will compare their portfolios with a Benchmark Index to keep track their performance. And usually, the benchmark used is the KLCI Index, which consists only 30 largest capital counters. This Index can be misleading to retail investor like us.
Here is why.
Look at the KLCI Index in Figure 1, Gosh! It only fell 3.5% Year-to-Date (YTD)??! Meaning the overall market only falls 3.5% YTD, despite all the bad news explained above.
But in reality, this is not the case.
Now, let’s take a look at the Small Cap Index (Figure 2). It actually starts falling in early Jan 2018 (green circle) after the window dressing in Dec 2017. YTD, it wipes off more than 24% from the top.
Figure 2
If we zoom further out (see Figure 3 below), we can see that it actually wipes off the entire bullish gain in 2017!
Figure 3
So, don’t be discouraging if the portfolio you holding is in red now. The entire market is really bad.
Furthermore, the 14th General Election is on the way. There are a lot of uncertainties lie in between. Traders confidence are badly hurt. Value investors are still waiting for bargain hunting. Foreign funds are holding their feet, wanting to have a clearer picture before flow in again. The market may stay quiet until all the doubts are cleared if no catalyst to boost the market.
Stick to a rightful mindset
As I always said, having a right mindset is essential if you want to survive in the stock market. You have to know your own characteristic and decide where you stand.
If you’re a trader, know when to stay aside. You should already clear all your position by now.
If you’re an investor, know when to do the bargain hunting. You should now have your bullet (cash) and homework (targeted stocks) ready for the opportunity to buy cheap.
If you still have a full list of stocks with you by now, you probably get hit badly this round. Don’t be discouraging. Take it as a lesson, find out why it happens and try to mitigate the impact.
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Last but not least, the trade war has just begun. How long will it last? Will the market rebound tomorrow? Or will it go further down? God knows. In the meantime, let’s have your popcorn ready and see what US gonna respond tonight.
Cheers!
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