2008 KLCI reach the highest points around 1,500 and lowest around 800, in drop 46% in 10 months time from the top. This is a huge different, if base on today KLCI around 880 to achieve 1,500 it need to increase around 70%.
Back to Warren Buffett quote, we only have do a few things right such as sell the stock at the peak point and hold the cash, and wait for the right timing.
More worse is, we buy the stock at the peak point, at that time we can see a lot of stock transaction even the housewives, students, pensioner, small businessman and etc went to "invest" shares. More crazy is, the housewives after went to wet market also rush to securities firm just to buy shares. They just speculated the stocks, they may not even know what stocks they bought, they are so happy that time because they are making money at that moment. After the shares start to drop, they still longing that the stock may go up again. Until reach the certain level, they started to complain that shares can not buy and come out a lot of their own terminology. Just want people to agree them, that we should not buy shares.
Will those claim themselves as investor repeat their "investing" style once again in the future? Or will there more and more people behave like them, buy stocks while the stock reach the peak?
We understand the theory of, while people is greedy for the shares we should sell it, while people is fear for the shares we buy it. Beside that, we should also look at the fundamental of the shares, are the company in healthy conditions?
After we understand the theory, how do we execute it? Your action affect your destination.
Happy Investment!!!
Reference / Source :
1) http://www.bloomberg.com/
