Market direction week Aug 6

Over the past weekend, did some stock research. According to many forum members and bloggers, there could be many margin call on the coming week. So, expect lots of volatility coming. For those who has minimum exposure to stock, it might be worthwhile to pick up some good stock. But keep the percentage of investment small. If it correct further, then you can buy cheaper.

Most of the time, market exhibit this irrational exuberance. When it is a strong bull run, many trader/punter/momentum players came in to push the price to an astronomical level. We could see stocks with historical PE of 40~50. People always justify the price because of high growth expected and reasonable forward PE.

At the time of uncertainty/severe correction, wave after wave of selling emerged. Be it human fear/margin call, it depress the stock price to an unseen level which you could pick up some good stuff with cheap price. After a while, people would say the selling is over done. Then, market rebounded and pick up from there. Keep your emotion in check, control the greed and fear. We hope to time the purchase a little bit better. Sell during an euphoria, buy during the depression.