The darkest hour is the beginning of dawn |
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Written by Ben
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Monday, 06 October 2008 |
The market always turns around when it is most negative. The best time
to buy is at the end of a bear market. Here, the risk is low and the
reward is high. Entries at this time will be safe, and if you pick the
right stocks and adopt the buy & hold strategy, your returns will
be enormous.
The
end of a bear market is usually marked by heavy volume accompanied by a
steep drop. This is known as a panic sale. Fear will be in everybody’s
face and everyone will be scrambling for the exit door. Gloom and
despair are seen everywhere. Overly pessimism will cause the market to
be oversold. After the panic sale, the
market may suddenly burst back to life and shoot up. An example of this
happened in the financial crisis in 1997/1998. If I am not mistaken, it
was on September 1, 1998 when Malaysia
commenced capital control. On that fateful day, the KLCI plummeted some
100 points to 261.33. But it bounced back more that 100 points the
following day. Such was the velocity of the market then.
Those who survived the onslaught and had the guts to buy, had invested wisely. I am glad to say, “I am one of the survivals”.
Buy in fear! Do you have the guts?
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