The market had a shock, dropping substantially over the last 1 week. In fact, I had noticed of something which is not normal in one of my small article, but not able to foresee that the large funds are readjusting their portfolio. Even the large Malaysian funds are not able to defend, or rather they would not, preferring it to take a much needed breather, then go in again. Smart funds do that.

On the market, it seems to me that the market is seen a tapering off. Now, as retail investors, what do we do. We have to take a smart take ourselves. I am not able to predict (or foresee) where the economy of Malaysia as well as the world are heading. It is hard to predict where in some articles, say that the world is doing ok, while another one say otherwise. Let me provide an example, while one may say that the market is getting too expensive, the amount of liquidity today (despite tightening) will still see funds and individuals looking for places to invest. Some have invested into properties but again between properties and stocks, properties to me is much much more expensive. The tightening of liquidity will see it affecting properties more than stocks.

The thing about buying stocks or investing is that, we have to continue to buy something that we believe in i.e. those that will do well over a longer period. This is what fundamental investing is about. Throughout my investing life, I have seen many rounds of the similar situation happened. The same scenario, I have seen sometime back in 2005 or 2006, where stocks like Iris, FTEC (if one can remember) were trading at absolutely abnormal prices. The same scenario I have seen recently, where trading on penny stocks were abnormally high. This time around, it is not at those crazy stage but were moving towards that. The small crash however halted the rise. I am not sure whether the market will continue with the rise, but the important thing is to continue to look for good fundamental stocks. Much safer this way.

On advise given by investment firms which is to try to stay away from stocks that are largely held by foreign funds, it is the right thing to do in the short run, but foreign funds come and go actually. The move around. The funds may leave in July, August but may come back next year. Most of the time, foreign funds will just buy certain stocks. They for example will not touch stocks like Wellcall, but recently one did. They may not invest in NTPM.

These funds largely concentrate on larger companies that are covered by the analysts especially the MSCI stocks. Now the thing to continue to do is to see what will happen to the companies assuming that there is a minor slowdown in spending and GDP. What will happen to the banks, properties, consumer stocks, defensive typed stocks. Well we have to figure out as companies as in individuals are dynamic. Industries are dynamic as well.

---------------------------------------------------------------------
By the way, note that IJM has bought a 3.4+% block from Tan Sri Chan Ah Chye. What does that mean?