"More money is probably lost by people who attempt to invest their money conservatively and sanely, but ignorantly, than is lost by those who enter into frank speculations." - John Moody
Thursday, 4 April 2013
LSL Market Review 4th Apr 2013
Market gained further ground on banking and financials mainly from smaller-capped counters. National Development Bank, Union Bank and DFCC rose further today to improve their 52-week high prices. It was encouraging to see plenty of retail activity on smaller capped banking counters. Approximately 19 million shares of Nations Trust Bank changed hands amounting around 8.2% of the issued share capital of the company.
ASI gained 25.09 points (0.44%) to close at 5,753.56 and the S&P SL20 index gained 13.74 points (0.42%) to close at 3,319.01. Turnover was Rs. 1,648.5Mn.
Top contributors to turnover were Nations Trust Bank with Rs. 1,184.0Mn, Sampath Bank with Rs. 92.2Mn and Union Bank with Rs. 67.5Mn. Most active counters for the day were Union Bank, Merchant Bank of Sri Lanka and Nations Trust Bank.
Notable gainers for the day were Ceylon Leather Products up by 14.9% to close at Rs. 79.30, Merchant Bank of Sri Lanka up by 12.1% to close at Rs. 18.60 and HDFC up by 10.7% to close at Rs. 45.40. Notable losers for the day were Free Lanka Capital Holdings down by 7.7% to close at Rs. 2.40, Tokyo Cement down by 4.8% to close at Rs. 22.00 and Central Investments & Finance down by 4.0% to close at Rs. 2.40.
Cash map for today was 65.57%. Foreign participation was 72.56% of total market turnover whilst net foreign buying was Rs. 17.27Mn.
Lessons Learned - The 1929 Stock Market Crash
Once
the First World War was over, the U.S. entered into a new era. It was a
time of great enthusiasm, and optimism. This was a time when great
inventions, like the airplane and radio, made pretty much anything seem
possible in the 1920's.
By around 1925, more and more people were getting involved in the stock market. Then in 1927, there was a very strong upward price trend. This enticed even more people to get into the stock market. By 1928, the stock market boom had taken off.
At this point, the stock market seemed like a place where virtually everyone thought they could become rich. The stock market had reached a fever pitch. Everyone thought they were an expert, and stocks were talked about everywhere. Tips were given by almost everyone.
Lesson number one: Beware when the fever pitch is high, and everyone thinks they are a master of the stock market, getting richer by the day. Beware when everything seems too good to be true, and tips are given out by almost everyone.
About this time, the Federal Reserve began to raise interest rates. Then in March of 1929, the stock market suffered a mini crash. In the spring of 1929, there were more signs that the economy could be headed for trouble. Steel production went down, house construction slowed down, and car sales tailed off.
Lesson number two: Rising interest rates is a negative for the stock market. Also, when economic conditions begin to deteriorate, this is another negative.
In the Summer of 1929, the market surged ahead again, and all early warning signs were forgotten. From June through August, the stock market reached its highest price level ever. Nearly everyone thought it was a stock market heaven, which would never end.
Lesson number three: When the market seems too good to be true, it probably is, and at the very least, a correction is coming soon.
It is important to remember that markets do not go straight up forever. What we are seeing here is a classic example of mob psychology in full force. This is human nature at work, with the emotion of greed taking over many people. A real get-rich-quick attitude.
By August of 1929, many leading stocks were rising in price in dramatic fashion. This is called a climax run, and another warning sign of trouble up ahead for the market.
Lesson number four: When leading stocks, after a big run up in price, make huge price gains in a relatively short period of time, this is a warning sign of the market topping.
The stock market peaked in September of 1929. At this point, heavy selling in big volume began to happen, and became somewhat common place. This is a major sign that smart money was leaving the market. There were five declines on heavy volume throughout September. All this selling was happening a full month before all hell broke loose in the stock market.
Lesson number five: When general market declines on heavy volume begin to mount, it is definitely time to start selling your stocks. This is a major warning sign.
The Dow declined nearly 90% from its peak in September, 1929, to its July, 1932 bottom. Many people lost their entire savings, and more. Savvy traders saw many signs of trouble, and had plenty of time to exit the market, before it really started to crash.
Lesson number six: Those who knew the market warning signs, and acted, had plenty of time to exit the market, before it crashed, late in 1929. These stock market warning signs are just as valid today, as they were back then. Always keep an eye out for these warning signs, and act appropriately.
By Gary E Kerkow
Article Source: http://EzineArticles.com
By around 1925, more and more people were getting involved in the stock market. Then in 1927, there was a very strong upward price trend. This enticed even more people to get into the stock market. By 1928, the stock market boom had taken off.
At this point, the stock market seemed like a place where virtually everyone thought they could become rich. The stock market had reached a fever pitch. Everyone thought they were an expert, and stocks were talked about everywhere. Tips were given by almost everyone.
Lesson number one: Beware when the fever pitch is high, and everyone thinks they are a master of the stock market, getting richer by the day. Beware when everything seems too good to be true, and tips are given out by almost everyone.
About this time, the Federal Reserve began to raise interest rates. Then in March of 1929, the stock market suffered a mini crash. In the spring of 1929, there were more signs that the economy could be headed for trouble. Steel production went down, house construction slowed down, and car sales tailed off.
Lesson number two: Rising interest rates is a negative for the stock market. Also, when economic conditions begin to deteriorate, this is another negative.
In the Summer of 1929, the market surged ahead again, and all early warning signs were forgotten. From June through August, the stock market reached its highest price level ever. Nearly everyone thought it was a stock market heaven, which would never end.
Lesson number three: When the market seems too good to be true, it probably is, and at the very least, a correction is coming soon.
It is important to remember that markets do not go straight up forever. What we are seeing here is a classic example of mob psychology in full force. This is human nature at work, with the emotion of greed taking over many people. A real get-rich-quick attitude.
By August of 1929, many leading stocks were rising in price in dramatic fashion. This is called a climax run, and another warning sign of trouble up ahead for the market.
Lesson number four: When leading stocks, after a big run up in price, make huge price gains in a relatively short period of time, this is a warning sign of the market topping.
The stock market peaked in September of 1929. At this point, heavy selling in big volume began to happen, and became somewhat common place. This is a major sign that smart money was leaving the market. There were five declines on heavy volume throughout September. All this selling was happening a full month before all hell broke loose in the stock market.
Lesson number five: When general market declines on heavy volume begin to mount, it is definitely time to start selling your stocks. This is a major warning sign.
The Dow declined nearly 90% from its peak in September, 1929, to its July, 1932 bottom. Many people lost their entire savings, and more. Savvy traders saw many signs of trouble, and had plenty of time to exit the market, before it really started to crash.
Lesson number six: Those who knew the market warning signs, and acted, had plenty of time to exit the market, before it crashed, late in 1929. These stock market warning signs are just as valid today, as they were back then. Always keep an eye out for these warning signs, and act appropriately.
By Gary E Kerkow
Article Source: http://EzineArticles.com
Wednesday, 3 April 2013
Quote for the day
“Remember, the markets are set up to naturally take advantage of and prey upon human nature, moving sharply only when enough people get trapped on the wrong side of a trade.” - John F. Carter
LSL Market Review 03rd Apr 2013
Banks were the star performers today with Nation Development Bank, DFCC Bank and Union Bank reaching their 52-week highs. National Development Bank, which declared LKR 10.00 dividend in last week, closed at LKR 171.00 (+1.6%) with only one day remaining before the XD. DFCC Bank closed at LKR 137.10 (+3.8%) while speculators drove Union Bank share to LKR 19.30 (+12.2%) during today’s trading session.
ASI advanced by 23.85 points (+0.42%) to close at 5,728.47 and the S&P SL20 index gained 15.90 points (+0.48%) to close at 3,305.27. Turnover was Rs.931.2Mn. Top contributors to turnover were John Keells Holdings with Rs.304.4Mn, National Development Bank with Rs.121.6Mn and Nations Trust Bank with Rs.92.8Mn.
Notable gainers for the day were Seylan Merchant (non-voting) up by 33.3% to close at Rs.0.40, Kalamazoo up by 22.1% to close at Rs.2199.00 and Softlogic Capital up by 19.2% to close at Rs.6.20. Notable losers for the day were Gestetner down by 10.9% to close at Rs.142.60, Multi Finance down by 8.5% to close at Rs.21.50 and Lanka Ceramic down by 8.1% to close at Rs.60.10.
Union Bank, Nation Development Bank and Pan Asia Bank were the mostly traded stocks. Further, among the heavily traded stocks Central Finance dropped by 7.2% and reached 52 week low price of Rs.2.50 during the day.
Cash amp for today was 61.7%. Foreign participation was 21.7% of total market turnover whilst net foreign buying was Rs. 328.0Mn. Yields on 3-months and 12-months treasury bills remained flat on today’s auction while 6-month bids rejected.
Tuesday, 2 April 2013
The 10 Commandments
1. Thou shall not go against the trend.
If it be down, let it be down. The market is bigger and stronger than you.
Follow the market but be one step ahead of the crowd.
2. Thou shall not follow the herd instinct
Just because many people are buying a certain stock does not mean you should follow suit. If people want to buy rubbish stocks, that is their bad luck. Don't make it yours.
3. Thou shall treat the market as a business, not a casino
The stock market is not meant to be a casino and you should not be there to gamble.
4.Thou shall not buy high-debted and no-earnings stocks
All companies that folded are highly geared with negative earnings. Don't buy rubbish shares; don't buy somebody's liabilities.
5. Thou shall only buy solvent companies with good-growth prospects
Present earnings are important, but future earnings are more important. That's why we have companies selling at high PER (Price earnings ratios).
6. Thou shall not be overconfident
Overconfidence leads to overtrading. Once you overtrade, you may not be able to control your own emotion. Fear may set in when the market is not going the way you expect it. It may disrupt your plan, turning your profitable trade into a loss.
7. Thou shall invest within the comfort zone
Don't be too greedy; don't play with borrowed money. Debt is a disease. It can cause you a lot of problem if you are not careful.
8. Thou shall be patient
The market is designed to transfer money from the impatient to the patient. You must have very good reasons before you switch counters. Very often, the shares you sell move up faster than the shares you buy.
9. Thou shall be disciplined
Don't change your strategy at the eleventh hour. If you have placed a stop-loss in your chart, don't remove it unless it is replaced with a trailing stop-loss.
10. Thou shall be knowledgable
Investment in knowledge pays the best dividend. No one is so skillful that he cannot better his best. Keep learning for knowledge is boundless.
Happy investing.
If it be down, let it be down. The market is bigger and stronger than you.
Follow the market but be one step ahead of the crowd.
2. Thou shall not follow the herd instinct
Just because many people are buying a certain stock does not mean you should follow suit. If people want to buy rubbish stocks, that is their bad luck. Don't make it yours.
3. Thou shall treat the market as a business, not a casino
The stock market is not meant to be a casino and you should not be there to gamble.
4.Thou shall not buy high-debted and no-earnings stocks
All companies that folded are highly geared with negative earnings. Don't buy rubbish shares; don't buy somebody's liabilities.
5. Thou shall only buy solvent companies with good-growth prospects
Present earnings are important, but future earnings are more important. That's why we have companies selling at high PER (Price earnings ratios).
6. Thou shall not be overconfident
Overconfidence leads to overtrading. Once you overtrade, you may not be able to control your own emotion. Fear may set in when the market is not going the way you expect it. It may disrupt your plan, turning your profitable trade into a loss.
7. Thou shall invest within the comfort zone
Don't be too greedy; don't play with borrowed money. Debt is a disease. It can cause you a lot of problem if you are not careful.
8. Thou shall be patient
The market is designed to transfer money from the impatient to the patient. You must have very good reasons before you switch counters. Very often, the shares you sell move up faster than the shares you buy.
9. Thou shall be disciplined
Don't change your strategy at the eleventh hour. If you have placed a stop-loss in your chart, don't remove it unless it is replaced with a trailing stop-loss.
10. Thou shall be knowledgable
Investment in knowledge pays the best dividend. No one is so skillful that he cannot better his best. Keep learning for knowledge is boundless.
Happy investing.
Quote for the day
"The most important quality for an investor is temperament, not intellect." - Warren Buffett
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