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Thursday, July 30, 2009

Waiting for the stockmarket to bottom

A few months ago, when the ST index was around 1,500, some people commented that they will buy when it reached 1,200. That was their target for the stockmarket to bottom out.

But, it did not reach that level. Instead, the ST index had recovered 1,100 points (more than 70%) over the past few months. Those who waited for the stockmarket to reach 1,200 missed the boat.

Lesson 1: Do not be greedy. If you find the stocks to be of good value, you should buy and keep for the long term.

I bought my shares when the stockmarket was around 2,500. I did not sell the shares when they lost nearly half of its value. I kept them for the long term. These shares have since recovered in value (nearly).

Lesson 2: Avoid trying to catch the right time to sell or buy. If you are not sure, keep the shares for the long term, provided that they are blue chip shares. Do not sell, when the share price is depressed due to liquidity or fear.

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