STI ended the week flat, with first few days of the week closing high and a drop on the last. No thanks to the government announcing additional plans to curb the property market. The victims, most property counters like Capitaland, took it quite badly. We do not yet know how will these plans affect the property market, but investor are already taking it negatively. Fear, is the root cause of it.
On the other hand, DOW did well. Thanks to the recent good news on the banking sector. Bankers will be looking forward to a good bonus soon. Regardless of whether the lasting effect, Greed always tag along with the good news. Investors buying into counters with the recent flood of positive financial statements are banking on hopes that the market will share their sediments and support the price. Whatever the outcome is, one thing is for sure, the Brokers or Market Makers will be the ones laughing their way to the bank.
Fear and Greed are the 2 most dangerous/powerful emotions in the market, and I dare say that they may be the only 2 emotions that drive the market. To master them will take a lot of time and experience, but the rewards are definitely satisfyingly.
Often when I reviewed the counters in my watch list, I would question myself on why I didn't buy into the ones that have 'chiong'. The reply I got was Fear. Of course, one can argue that the reason for not initiating the buy was due to the lack of trust in their technical or fundamental analysis. Not having faith in their own research and thus, omitting out the wonderful opportunity to buy good companies at discounted price.
Fear counters like, BAC and Nvidia are just some of the examples. BAC's a good bank and it's fundamentals are strong. However, a few months back, it as affected by a string of negative news, causing it's price to plunge to a 52 week low of USD$10+. We all know that news are temporary and after they are forgotten or have been accepted, the market will re-price it back to the original value. The price now? USD$15+. The same applies for NVIDIA as well. I would not dwell much into it but all I can say is that it went from a price low of USD$9+ to the current USD$23+.
A typical Greed counter I got is Trident. It's fundamentally good with no debt and a healthy free cash flow. But competition is stiff and although it is aggressive in its business strategy with merger plans and partnerships, no one can say for sure how good the future will be. It has been in the red for quite sometime and during all this while, I've told myself to offload when it comes back to the price where I can break even. It did eventually and best of all, surge past the 'break even' point. I was profiting! Greed took over and I was pinning on the hopes that it'll go up even higher. Reality sank in and as fast as it hit the top, it felled down in an instant. It's back to square one again. Let's just hope that if there's a second chance, I would not open the door for Greed to enter.
Unlike doing analysis on companies, Fear and Greed is something that you can't learn from reading or studying charts or books. It's intangible and in build into one's gene. The only way to suppress or control fear is to face it head on. Take the leap of faith and overcome it. Action is the only way to go in such a case. With this post, I hope that if ever the same situations present itself to me, I'll have a much better strategy of handling it as compared to the past.
Happy investing!
Caveat Emptor,
SafetyChaos
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