Run for your life?

It is another worrying day. STI experienced another free fall. This proves an old saying "destruction is easier than construction". We need so many months to push the STI to 3600 level, yet just within few weeks, it is backed to square. Looking at the current market sentiment and condition, another plunge towards 2900 is not without possibility. Of course, I hope it does not happen, but we should have the mental preparation. Generally, my early thought still intact, that is buy some when we are at 3100, buy some more when we reach 2900.

I think human fear is a great driving factor for this severe correction. When the US subprime woes dominate people's mind, all would think of safety first. I pull out first and see later. That trigger the first selling and it snowballed. Whenever bad news errupted, more money pull out. More plunge weight down people's mind, they tend to join the herd. Hedge fund start pulling out of Asia market with the trouble at their own back yard. Unwind the yen carry trade to reduce the risk. I think the fund redemption and any leverage unwinding is the biggest factor in these few weeks of correction.

In the short term, 1 or 2 months time, sentiment is unlikely to recover strongly. So as to say the share price. Now, as a fundamental investor, it is better to selectively hunt for company with strong cash flow, visible earning in next two years, conversative management and cheap valuation. Still this is not the time to put all your money into work. Buy selectively for a small portion. After the tide seems turning, then re-enter the market again. For the time being, just sit tight and pray...