Strategies To Use In This Bearish Market

Strategies To Use

In This Bearish

Market

There is a famous saying : When you fail to plan, then you plan to fail. In short, if you do not have a proper plan to do something, you are likely to fail as without a plan, there won't be a strategy to execute and help you achieve the desired results.

When we have a plan, we will think of strategies to use and finally the action needed to be taken in order to get the results.

I am also a avid fan of war movies. If you watch war movies, chances are that the side who could think of a better plan, strategy and actions taken are likely to win the battle.

Two of the most expensive Asian-financed films produced were Red Cliff and its sequel Red Cliff 2.  These Chinese epic war films were about the imperial massive mighty army led by the Chancellor, Cao Cao on a campaign to eliminate the southern warlords led by the underdogs, Sun Quan and Liu Bei, both commanding a small army of soldiers.

Both Sun Quan and Liu Bei planned well with several good strategies to upset Cao Cao's mighty army on sea and on land several times.

Planning and Strategies and Action's Method (PSAM) are also needed when you enter into the investment world at Bursa Malaysia.

But before the stages of PSAM, the goal must be there too. What is your goal when you invest? I can't think much of other choices except to win money, whether it is 5% - 10% range or 30% - 50% or even 50% and above range.

Yes, we aim to win with our investment. That is why investor must come out with their respective PSAM. I do not think there is a standard PSAM for all investors, similarly there is no fixed PSAM as well.

Many investors are now reeling badly from the on-going market downtrend of Bursa. Many are seeing their paper wealth shrinking by the days and weeks. Some actually experienced extreme "hati sakit" as their paper profit had turned into real paper loss!

If you are one of those investors, yours truly would like to tell you that I am sharing this feeling with you as some of my shares are into that positions, too!

Some are even predicting that the market can even go lower to 1300 points in months to come. Nobody seems to dare to predict any uptrend of the Kuala Lumpur Composite Index (KLCI) to above 1,700 or even 1,800 points at the moment.

Truth is no-one has a super crystal ball to see the future direction of the market. If I have one, I definitely won't be telling anyone also. I will use it to profit immensely.

But I do have a PSAM. A PSAM  allows me to be discipline enough to apply it to have a better chance.

I can choose to allocate a sum of around RM5,000.00 to buy a particular stock (hopefully I identify it correctly) each time the KLCI drops 50 points. For example the KLCI dropped from 1600 to 1550 points, then I will execute my action.

Should the KLCI further drops to 1500 points, I will apply the same action as above. And when the KLCI should drop to even 1,000 points, I would have bought a particular stocks at every 50 points drop.

I would like to call this average investing at every 50 points drop. Bear in mind that each time there is a 50 points drop, the particular identified stock would most probably be bought at lower price compared to its previous original price when I identified it.

What if the KLCI continues to hover between 1500 to 1600 points for the next several months to come? Then another PSAM would be to buy a stock at around every 30 days. In this case, it is also another average cost  investing  over a period of times.

I would also like to stress that even with PSAM, there is absolutely no guarantee that one will make money because one must also be RIGHT in picking up the RIGHT stock that can rebound back sharply when the market bounces back in the future.

I also believe that there are many investors with their respective PSAM and there are also many drifting aimlessly currently, doubting whether to invest or wait for market to rebound back or even to give up investing!

One must remember that the market will never stay low or go even lower forever although it may stay in that range for a long time. When the convergence of good news start to trickle in, Bursa does not send out any invitation letters, whatsapps or emails to you to inform that the market is poised for a return and going for a rally run.

Similarly, the market will also won't be able to go higher and higher all the time. As I have mentioned before, sometimes up, sometimes down. Investors just have to live with this yo-yo movements of KLCI.

But if one is armed with a PSAM, I believe one stands a better chance as the risk is spread out due to the average-cost investing over a period of times.

Perhaps there are other investors with different PSAM that are even better than mine, I am sure there are many readers wanting to hear from you. But I know I am likely to get an almost zero response from those who have different PSAM, based from my previous experience with my readers.

Either you are shy, secretive or the takers-type only.

Are you?

Buying more Focus Lumber

Berhad shares again!

Readers would probably know that I have been buying Focus Lumber  Berhad shares since the beginning and again during the middle of the year.

Despite its excellent 2nd Qtr results, Focus Lumber's share price remains more or less my previous average purchase price of RM1.50.

On Aug 25, 2015 when the KLCI fell 42.53 points or 2.70% to close at 1,532.14 points, yours truly purchased 5,000 shares of Focus Lumber - 3,000 shares at RM1.46 and 2,000 shares at RM1.47.

Should the KLCI drops to between 1,450.00 to 1,500.00 points, another round of shares buying spree would be exercised. This is to spread out and average out my risk over a period of time.

So, dear friends, which PSAM am I using?

By the way, a very happy Merdeka to all!