Crisis ? What Crisis?

The stock market has been been alot of crisis since 1980. To name a few, we have the Asia Financial Crisis in 1997, it was quickly followed by the Dot Com bubble burst in the late 1999. This two crisis affected the STI and NASDAQ but both quickly recovered from it and prices reverted back to values that were sustainable and realistic. Most recently, we have seen the sub prime mortgage crisis affecting major banking and financial institutes. The banks pay the price for dabbling in complex structured products which they did not fully comprehend. Overnight, millions of dollars in savings, housing values and stocks values were wiped off. Now, investors and traders are still fearful that these debts might spill over to other loans like credit cards and car loans. And now, we are hit with a double whammy of poor economic conditions and high inflation.




However, King of Shares feel that despite all these gloom and glum, the sun will come out shinning soon. The stock market has always exhibit a cyclic trend and this trend will continue. So for those badly affected by the recent crisis, fret not, hold on to your investments, re-evaluate your investments periodically, and if the fundamentals that made you buy the shares in the first place has not changed, then the value of the shares will shine when the crisis is over.

To quote Monish Pabrai, in his latest book, "The Dhandho Investor", he wrote that "any stock that you buy should not be sold at a loss within 2 - 3 years, unless you can say with high certainty that the current intrinsic value is less than the current price the market is offering".

Disclaimer: It is not the intent of the author to advice the readers to purchase any form of investments after reading this article. Any opinions, conclusions or other information expressed here does not constitute any personal advice. Information are given on a general basis and are subjected to change without notice. The author will not be held liable for any losses resulting from any errors, inaccuracies or omitted data or from the use of the published information.