Shares are going down, what should I do next?

Recently in the stock market, we heard more bad news than good news. The market is falling more than rising. By now, most investors already familiar with high inflation rate, price of crude oil problem, Citigroup problem, sub-prime mortgage problem or credit fears, likely US recession... I'm sure most investors by now are aware with the current situation and are wondering what to do next? When market is heading south, all fundamental and technical analysis fall apart even countries who have fore-casted with impressive economy reports. The 'knives' are falling, most investors will avoid the 'damage' by cutting-losses, simply we are dealing with fear, panic and market uncertainties ahead. This 'panic-selling' of course aggravate the falls. One can see share prices keep falling faster than when market is in the bull run, all previous gain during the bull run can wipe off significantly, isn't that true?

Ironically, if you are rushing in to sell stocks that are on the way down but rebound later and you most surely regret about it but if you hang on and hope your shares will rebound but it never and you will surely regret also about not cutting early losses and you feel like a fool still hanging on to the stocks that just keeps on dropping. This is especially true when the country is in recession. So, It's a tough decision to make. Beware that not all heavily sold-down stocks are always poised for a rebound. Unfortunately for some troubled-stocks, one the damaged are done are done. It may takes them months or even years to recover to last peak. It can be quite frustrating. Sadly, but it's true.

So, what should I do now as a investor?

Frankly, I don't think anybody can really tell you accurately what is best to react now. Nobody can accurately predict the stock market; there is no such thing of looking at the crystal ball and predict the future of stock market, if anyone who claims to is either a charlatan or naive. Sorry to say that.

I think one still can make money on the stock market, but one may have to climb a wall of worry and uncertainties to do so.

At today's prices, most stocks would probably be a 'bargain' by now. But nobody know exactly when the market will hit the bottom until the full extent of loan losses are known.

Below are some other alternative investment strategies one might want to reconsider until the 'dark cloud' is getting clearer. This is just my personal opinion. Don't take it a sure bet. Always consult your brokers or consultants when invest your money.

1. Cut-loss especially those high P/E penny stocks with weak fundamental or troubled-stocks (in the black or red) . Question, when is the best time to sell or cut loss? Frankly, nobody know until the result is known. Market is full of surprises. If I tell you I know, I must be quite naive. In fact, your guess is as good as mine. But, personally, if you do see beginning of 'bear' run, I think is quite obvious to cut losses than see more losses later on.

2. What others investment is still consider a "remarkable bargain"? e.g. Gold, Silver, Copper, others precious metals ...
Generally speaking, when market is in the turmoils, personally, gold seem to be a better bet at that moment but don't expect to hold it for long when market do stabilized later on.

3. Park your money to banks who are still giving good interest rate like time deposit and "play safe" for the time being until the "dark cloud" is getting clearer or the dusts are settled? But don't park your money too long because your may have cash flow problems because your monies get stucked when investment opportunities do arises.

4. Stay on with government bonds with good coupon or dividend payouts but stay away with risky equity-linked products that claimed 'higher return' than fixed deposit in term of 'guaranteed' return of your investment. Nothing is 'guaranteed' as far as investment is concerned. Don't bet on your life saving! Be cautious with your hard-earned monies especially for retirees. Better earn less but safe like fixed deposit. Never let 'high return' tempt you to buy something you might regret later on. If some things are too good to be true, question yourself? The higher the return, the higher the risks. 'Greed' can turns to grief sometimes. So, please be prudent with your investments.

5. Accumulate strong fundamental blue-chips with a good bargain in terms of value versus price per shares (do research on the financial ratios and current development...), take into consideration of these stocks are still earnings good return despite bad economy and wait for technical rebound to make 'quick profit' from these 'bargained stocks'? But when is the best time to buy and maximize the profit? Frankly, I don't know. But if you do see the recession is at hand, hopefully not global recession, then better wait to buy at a 'lower' price to accumulate. Do bear in mind, recession has no mercy to all stocks, defensive or blue-chips. So please be prudent with your investment! Watch the current trends and latest news.

6. Invest through an index fund or an Exchange Traded Fund (ETF)? Any comments from readers?

7. Take advantage of any weakness over the next few months to scoop up bargains or improve the balance of your stock portfolio? Do your own research to pick the 'right' blue-chips.

All the above assumption and guessing can be devastated if the market is turning against one's decision. So, be prudent with your investments!

Personally, based on current situation, I'll see more downsides than upsides for months ahead.

My personal investment style is when majority of people (more than 90%) are very pessimistic about the stock market, I usually buy or start to accumulate good fundamental stocks like blue-chips with very low debts ratio. Likewise, when majority of people are overly optimistic about the stock market, I usually sell into strength or unload most of my shares holding. From my past experience, it does really help me to some extents. I guess I'm really lucky because I got out and made some good profits by selling most of my shares holding before July last year(2007). Now, I just sit and wait for the next opportunity arises.

Well, whatever investment styles you choose, I hope the market is not against you. Just be prudent with your investments! Consult your consultants if necessary.

Thanks you for spending your times to read this. All the best with your investments!

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