Wednesday, May 06, 2009

Kiasu Syndrome!

I bet that those that didn't buy 1 month ago are now feeling beh-tahan. Today's volume indicates that the small investors have the kiasu syndrome. They are scared that they have missed the train. Adding fuel to the fire is this and this. I like the picture from this Star article. You can see the smile in their face.

From the charts, the market is really overbought. That means the risk of a correction is higher. Those who buy at the peak may not have the staying power when the correction sets in.

Anyhow, I think that the current rally is all due to huge liquidity that is cause by near zero interest rate. Almost everyone is earning negative interest rate. Low bank interest rate is forcing the owner to seek a positive return. My friends are so eager to buy. For me, if I cannot find a good entry point, I will just not enter.

I must admit that I didn't expect this rally to be so powerful. But, think back a moment, when KLCI was at around 800, were you eager to get back in or feeling dejected by the stock market? A stock market bottom is usually characterize by the general feeling of dejected. When nobody wants to buy, that is real bottom.

So, enjoy the rally while it last. By the way, tomorrow may be the D-day for the zombie banks. A lot of leaks of the stress test result. Roubini does not to believe the test. Anyhow, what will be the market reaction? I think that it will only affect the banking sector.

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