When Will Index Correction End?

It's been 2 months, KLCI index has been dipping for more than 10% as of Thursday closing. What we are looking forward? Will this be a small or big bear?

As I mentioned in my post earlier, the problem is not so complicated as the financial crisis in 2008. Thus, it may not go back to where it starts again. Perhaps 2 to 3 months correction is consider a norm, as no index can goes up forever.

By looking at individual stock, some discounts are given. Do you feel like buying them? Or you worry it will dipped further? In fact, most of the counters in my portfolio are small-cap stocks. Their share price have been corrected quite a lot! With such situation, let's don't talk about making money, to not making loss from stock market also seems very challenging. So what is your existing strategy? I bet most of us hold and wait, right?

I've reviewed my portfolio this morning and some of them seem really terrible. The worst counters are MEGB and MUDAJYA. They dip the most. For MEGB, it's fundamental and prospect are badly affected. The drop of it's share price is reasonable and I unable to release on time. As for MUDAJYA, the fundamental is a little bit affected, but the prospect is still there. Overall, construction counters are dropping badly, not only MUDAJYA, so changing horse won't help much. I've been practicing dollar cost averaging (DCA) for this counter. But the dropping of this counter is like no tomorrow.

I did not invest further on MEGB, because I don't think it is worth anymore for me to invest further after I've done my study on it. Yes, the business model looks very simple. It's peers like HELP and SEG are doing very well. MEGB itself also did quite well in 2010. However, it's earning capability has changed a lot in 2011, especially in this latest quarter. My bad that I did not follow-up closely on this counter. I did not aware there is change of SPM credit requirement, SPM result delay, etc. I was totally blank until I read those craps in the latest quarterly report. I committed a serious mistake on this.

For MUDAJYA, I really don't think it has much problem so far. Thus, I will still continue to allocate some capitals and do DCA on this counter for few more times. I even sold all my CEPAT shares and swapped them into MUDAJYA shares last few days ago.

I know it looks very risky, and the share price can drops further. From my observation, the share price dropping can be due to foreign fund managers under top 30 shareholders are offloading their shares from this counter. Thus, it is generating huge sell orders for the past 1.5 months. 

Nonetheless, I still don't see any problem on this counter and I think it still has a bright prospect. The value now looks really a super value buy. Besides cash flow reserved, courage is highly required to do DCA during this time. Everyone is fear for further dropping, but I take this calculated risk and act on it. Hopefully it will bring me good return. 

The experts are expecting this is a small bear and it should ends in the early of next month. Let's see how it goes.

Happy investing, folks.

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