27 July 2007 Day One of Market Correction

This is a wakeup call for all investors including myself. It includes the newbie, the naive and the speculator.

For the newbies, by now, they should understand the risk involved in investing( more maybe speculating to them). Yes market goes up in the long run. But for newbies, with no first hand knowledge of market news will be the one whom get left behind when the market moves (both up and down.)

For the naive who thinks that the market never goes down, they should be sitting and crying of their irrational exuberance. Because they will be the one who will perhaps buy high and sell low. This will occur when the experienced investors/speculators take profit before anyone does.

For the speculators who were playing with penny stocks and pumping up the stock prices, many brokers have intervened but i think it will not stop them. Because as speculators, they do not care of how the company is doing and what they actually do. They just pump the price up and make the profit.

In my opinion, this is a zero-sum game. Because someone has to win and someone has to lose. It's no difference from gambling.

Investing is a different thing as you are investing in a company who will be making profits and in turn will in turn up the value of the share in most cases. Because of demand and supply, if investors are optimistic of the company's growth, price of the stock will increase due to demand and a lack of supply(sellers).

So how has the correction affect the speculators?

The range of type of speculators varies. Speculators without a clear defined strategy will lose out. Brokers & SGX love speculators for their commission. SGX profit doubled to $100 million for this 1H 07.

How did this affect you?

I never saw it coming... Don't let your emotions rule your decisions. No I'm not burnt, just a little pinch...