Investors enthused by rising market, especially among lower-cost punts

As a sentiment indicator, we should probably all be wary when we start reading articles like these in the news! I am very cautious in my approach now that optimism is rearing its head - not a good environment at all for purchasing securities with a margin of safety!

The Straits Times
www.straitstimes.com
Published on Feb 06, 2013
Investors enthused by rising market, especially among lower-cost punts

By Jonathan Kwok

TRADING volumes have gone through the roof this year as investors flock back to the share market, many with the hope of making a quick buck on penny stocks.

About 4.88 billion shares are changing hands during every trading session, more than twice the 1.78 billion average in the same period last year, Bloomberg data shows.

The value of those trades has risen too. The daily average of $1.8 billion this year is more than 40 per cent higher than the $1.28 billion in the same period last year.

The much greater jump in volume figures than the value reflects the lower average values of the units being traded, indicating that investors are keener on penny stocks and lower-cost punts.

"From December, I already had some clients that came in. Because January was such a good start, a few more of my clients came back," said remisier Desmond Leong. "The market volume reflects this."

He notes that January is usually a good month for the stock market as people start to position themselves for the rest of the year. The market - and trading volumes - also performed well in December compared with previous years so there had been some momentum leading into the new year.

While the general market has been on the rise, the really impressive gainers have been among the penny stocks that investors are focusing on.

The FTSE ST Catalist Index, which tracks stocks on the secondary Catalist board, has jumped 13.1 per cent this year while the FTSE ST Fledgling Index - it contains the mainboard's smallest stocks by market value - is up 15.3 per cent.

By contrast, the behemoths on the blue-chip Straits Times Index (STI) have had a much more muted showing. The index is up only 3.3 per cent for the year, while trading volumes of STI member stocks have actually dropped compared with last year.

An average of 262 million shares of STI stocks have changed hands each session this year, compared with last year's 360 million shares.

Still the market has had a strong showing, especially last month.

Singapore Exchange (SGX) figures out yesterday showed that the bourse's market capitalisation at Jan 31 hit a record for end-of-month values.

The combined value of all primary and secondary listings was $985.8 billion at the end of last month, SGX data shows.

That topped the previous record of $934.5 billion set at the end of December, which had in turn beaten the $921.5 billion value at the end of October 2007 - the market's peak before the global financial crisis.

Observers said the market has recently been boosted by rounds of money-printing by central banks in the United States, Japan and Europe.

There were 776 listed securities at the end of January, unchanged from December, SGX data shows.

There was one delisting during the month but also one new listing, so the number of securities listed remained unchanged.

There are more listed stocks now than at January last year, when there were 772 securities on the SGX.

jonkwok@sph.com.sg

(06-02-2013, 07:16 AM)Musicwhiz Wrote: As a sentiment indicator, we should probably all be wary when we start reading articles like these in the news! I am very cautious in my approach now that optimism is rearing its head - not a good environment at all for purchasing securities with a margin of safety!

Yea! This is possibly one of the worst signs- overconfidence breeding greed.
And my screens for value are throwing nothing but small-cap names, some of them in businesses that produce lumpy cashflow and take on a lot of debt.

Not an easy time for value.

(06-02-2013, 09:03 AM)kazukirai Wrote: Yea! This is possibly one of the worst signs- overconfidence breeding greed.
And my screens for value are throwing nothing but small-cap names, some of them in businesses that produce lumpy cashflow and take on a lot of debt.

Not an easy time for value.

Yah, in this environment it's nice to be able to just accumulate cash and wait. No hurry at all to buy anything if I do not see value.

Quote:Yea! This is possibly one of the worst signs- overconfidence breeding greed.
And my screens for value are throwing nothing but small-cap names, some of them in businesses that produce lumpy cashflow and take on a lot of debt.

Not an easy time for value.

To see the same kind of capital gains returns from value investing takes a long long time. For your stocks to 'move' you will need speculators they are the ones will buy on what is hot and ignore fundamentals.

Also partly due to property cooling measures the speculators in there are dead with rules in place they can't play it anymore so they are taking the money they made there and coming into the stock market. Now we just seeing the speculators, wait till you see the big players come in and we haven't seen them yet.

If you go back 6-8months most of the charts if you look they came down from on high further a few years back and were trading sideways then means down the road there is a possibility for retracement ... when that could happen? nobody knows.

If you look at last few weeks things are starting to pick up and retrace, once the big boys quit the property scene and come in you will start seeing stocks going parabolic.

gonna be interesting

Don't forget to sell if what you have becomes over-valued....

I was cautioned by the sight of a boss of a hardware shop, looking at the numbers on the teletext of his 14inch tv. That scared me.

(06-02-2013, 09:34 AM)sgd Wrote:

Quote:Yea! This is possibly one of the worst signs- overconfidence breeding greed.
And my screens for value are throwing nothing but small-cap names, some of them in businesses that produce lumpy cashflow and take on a lot of debt.

Not an easy time for value.

To see the same kind of capital gains returns from value investing takes a long long time. For your stocks to 'move' you will need speculators they are the ones will buy on what is hot and ignore fundamentals.

Also partly due to property cooling measures the speculators in there are dead with rules in place they can't play it anymore so they are taking the money they made there and coming into the stock market. Now we just seeing the speculators, wait till you see the big players come in and we haven't seen them yet.

If you go back 6-8months most of the charts if you look they came down from on high further a few years back and were trading sideways then means down the road there is a possibility for retracement ... when that could happen? nobody knows.

If you look at last few weeks things are starting to pick up and retrace, once the big boys quit the property scene and come in you will start seeing stocks going parabolic.

gonna be interesting

Yeah, the show just started.......Got it right, can retire much earlier...

so 2 extreme views on this thread.

(06-02-2013, 09:54 AM)psolhawk Wrote: I was cautioned by the sight of a boss of a hardware shop, looking at the numbers on the teletext of his 14inch tv. That scared me.

I used to think like that when these people appear stay away from the market when these people not around go in.

Partly true and partly untrue depending on what kind of investor you are. if you gone thru several of the bearish markets when they were in correction there's many opportunities but they all very slim pickings. If you are value investing how many stocks really pay dividends consistently during bear market and those that do only once or if you lucky twice a year, if those were bad time in market it will also be equally bad to do business you will see them cutting cost and maybe cutting dividend or if they lose money then no dividend then you are screwed because you wasted a whole year banking on that dividend.

Or you could join the ranks of half cent punters fighting over scraps during that time nobody was bother to even look at teletext anymore making money on stock market during those times was so terribly hard.

Now they looking at teletext means is a very good sign.

Most active stocks are the penny counters, this tells all.