Get it real
August 10th 2007 06:31
Probably the best thing to do now is do not do anything, whether you are a long term investor or a short term trader. Unless provided that if you can take the risk and huge loss, don't dip into the market for the time being.
The current market volatility seems to be embedding itself firmly on a global scale. And the credit dominoes have fallen, first in the US then it hit the Eurozone yesterday and finally, Asia was hit today as displayed by Asian central banks to inject more cash into the banking system in effort to stabalise the credit fears. Commercial banks have stopped lending each other, which could dampen economic growth.
The last thing the local market needs is a slowed down economic growth in Asia. At the time of writing this, global markets are in the red. The Hang Seng and the ASX S&P 200 index shed more than 3%.
Analysts believe that the local market is in the oversold territory with investors overreacting on the current credit fears. However given the market herd mentality is on the overdrive, going against the tide based on the fact that fundamentals are strong is probably not the wisest thing to do now.
In other words, the noise trader risk is high and betting against the crowd in the believe that the stock prices will revert to their fundamentals may take some time and incur susbtantial capital losses.
Hong Kong-based Columnist, Stephen Brown writes in The Standard:
"Any one individual's actions are of course irrelevant. However, collectively, individuals comprise the market. If a good proportion of the people in Hong Kong also sell alongside you, the markets will quickly tumble.
This decline can, if confidence in the market is undermined, translate into a self-generating panic. Financial crises occur when a large number of individuals have the same idea and sell almost simultaneously."
You probably get the idea now. Get real, mate.
The current market volatility seems to be embedding itself firmly on a global scale. And the credit dominoes have fallen, first in the US then it hit the Eurozone yesterday and finally, Asia was hit today as displayed by Asian central banks to inject more cash into the banking system in effort to stabalise the credit fears. Commercial banks have stopped lending each other, which could dampen economic growth.
The last thing the local market needs is a slowed down economic growth in Asia. At the time of writing this, global markets are in the red. The Hang Seng and the ASX S&P 200 index shed more than 3%.
Analysts believe that the local market is in the oversold territory with investors overreacting on the current credit fears. However given the market herd mentality is on the overdrive, going against the tide based on the fact that fundamentals are strong is probably not the wisest thing to do now.
In other words, the noise trader risk is high and betting against the crowd in the believe that the stock prices will revert to their fundamentals may take some time and incur susbtantial capital losses.
Hong Kong-based Columnist, Stephen Brown writes in The Standard:
"Any one individual's actions are of course irrelevant. However, collectively, individuals comprise the market. If a good proportion of the people in Hong Kong also sell alongside you, the markets will quickly tumble.
This decline can, if confidence in the market is undermined, translate into a self-generating panic. Financial crises occur when a large number of individuals have the same idea and sell almost simultaneously."
You probably get the idea now. Get real, mate.
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