Thursday, August 4, 2011

U.S. Market dropped 5% and what does it mean?

U.S. Market dropped nearly 5% last night, causing Asian markets, including Singapore, in a huge sell off.

All I can say is, "Speculators worry, Investors rejoice!"

Real investors do not worry about the big drop in the market. We invest in the companys' businesses and not the emotion of Mr. Market.

Mr. Market represents the general public's, mainly speculators', fear or greed. This is where we apply this famous quote, "Be greedy when others are fearful."

For those who does not own any shares, it's a good time to own some quality stocks. For those who already have some wonderful companies', it's a good time to stockpile. However, we should not time our purchases. We can never predict Mr Market's mood. Once the share price drops by 10 to 20% below your personal valuation of the stocks, buy them. If it has not happened, then wait further.

A value investor, like myself, waits for good opportunities to buy more shares. We do not time our purchases nor do we sell in panic. As long as we know the value of the companies we invested in, we will know when to buy or sell the shares.

Disclaimer: This post is just my personal view. All investments contain risks. Readers are advised to exercise their own discretion when investing.

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