Wrath of the stock panic sellers
The world market is undergoing a state of panic selling. The fear of facing a worldwide recession (some experts even claimed that the recession this time is worse than the Great Depression in the 1930s) is becoming overwhelmingly strong. Investors across the globe are losing confidence and the fact that the recession arrives sooner than expected (we’re not even in the predicted recession year of 2009 yet) simply don’t help to improve the current situation.
We’re in for a big mess (I’m already in it, waist-deep).
On the contrary, there are still a lot of companies who are earning money and some even recorded record profits, and yet, their share prices have been plummeting like nobody’s business due to selling pressure.
Enter the realm of the panic sellers and be prepared to feel their wrath.
So who are the panic sellers?
One of them is the fund managers. Unlike normal investors like us, they do not have the luxury to “wait it out”. We can put our investment in there for 1 year or maybe 5 years, we certainly have that holding power (if you don’t have that holding power, you shouldn’t be in the market now. You still have time to bail out before it drops further). For them, good performance is needed even though the market is bad. The pressure to minimize losses and increasing the value of the funds, is definitely there. They just cannot wait that long and thus resorted to sell, to regain their money (perhaps to buy in again later, at a lower price). Supposedly, we should be following their trend, but the issue here is, they always move one step faster than us (the smart investors have already pulled out before the fund managers. Only newbies like me are stuck). By the time we realized the actual situation, it’s already too late, the price has already dropped.
But most people don’t think so. They started to panic, and they sell. In the end, the scenario is like this.
Fund manager panics -> sell -> price drops -> causing panic to main population -> sell -> price drops further.
So a stock price of RM 5, after selling pressure from the fund manager might end up in RM 4.50 range, but further selling pressure from the main population will pull it down even more to RM 3.50 – RM 4 range.
The main problem here is, this cycle will not end anytime soon.
Take a look at the current market and at the price of some blue chip counters, they are ridiculously cheap. True, the cycle never ends here, but now is actually the time to enter the market if you have extra cash. However, do bear in mind that you need to do proper evaluation and you MUST have the power to hold for at least 1 year. Else, don’t enter the market. Or worse, don’t even think of going into stock investing.
For now, keep your eyes open WIDE. Don’t panic, and don’t fall into the trap of panic selling. Be patience and observe. Whenever the main population sees a problem, the smart investors will see an opportunity. All the best (to you and to myself).
NOTE: The above is just my opinion. Do correct me if I’m wrong since I’m still a beginner.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
@ Laura1318
Whether those syndicates are involved or not, or they are the victims, I’m not too sure. But what we as normal investors can do is to pick our stocks properly. Look for sustainable blue chips and not some startups as those companies are quite dangerous.
Hi,
The only way you can beat those syndicates is to only pick those blue chips with those good reputable management during the end of the bear market and hold out for the next bull trend.
The best buying time is when the market is dead , where the price has found it’s support level.
@ Laura1318
Good point but the problem now is, it’s pretty hard to predict where is the support level. 
When the market is hazy or blurred, it is best to stay out of it and monitor the performance from those charts.
A simple line chart or the Japanese candlestick chart can show where is the SL. An understanding of those two charts is essential to know when to enter and exit the market.
It may not be 100% perfect but it is better than no system or just random buying/selling.
@ Laura1318
What is SL? 
To be honest, I’m currently learning how to look at annual reports, account statements and balance sheets. I should’ve learned all these before I put my hard-earned money in. Now it’s too late (got burnt very badly), but just want to prepare myself for the future.
I’ve yet to study on how to read the candlestick charts although I know they are very important.
Those syndicates can press the stock prices down for a long time if they want and a lot of people may not have the patience to hold on . This is an accumulation period for them.
Sometimes , if you buy a wrong stock , it may even end up ‘zero’ and your money is down the drain.
This is like a cat and mouse game.