Market crash during the week 15th May to 19th May 2006

On Monday, the STI has its largest drop...don't know since when and on Thursday, it has its 2nd largest drop.  While most of the stocks I hold are not included in the STI, they were sold down too.  I see my cash portfolio dropped by approximately 6k over the week.  The unrealized gain has gone into negative territory.  My CPF portfolio is more resilient, fluctuating as per normal trading day.

So what was my response to this?

When I first read the headline on Monday before going to school, I was a bit gutted.  As last week, I was thinking of cutting my loss on YHI this week and switched the cash to other counters.   Reason being I think I have purchased YHI too expensively and other counters probably provide a better return in the same time frame.

I have already regretted making a too hasty use of the gain that I have earlier made on three new counters; I thought I could have been more patient.  This crash compounded my error and makes the lesson slightly more painful especially when I do not have much cash to take advantage of this weakness in the market.

In any case, I was thinking of selling China Flexible Packaging to raise funds to purchase other counters but after considering the low valuation the market is giving CFP at the moment, I decided against it.  I do feel that the market has over reacted to the raising oil price and “punished” my two plastic related counters: CFP and Full Apex too much.  With the two companies still expanding their top line and with ROE around 15%, the potential upside when the oil price stabilizes is at the very least interesting.

After overcoming the disappointment of the lack of funds to purchase more shares, I’ve decided to stay put with my counters and continue to track their business.