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Sentiment simply means it could change, quickly

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This is what Warren Buffet said when it comes to stock investment. “Be fearful when others are greedy, and be greedy when others are fearful.” Briefly, this meant that when everyone is buying like there’s no tomorrow, we should stop following. When everyone is selling like there’s no tomorrow, we should now start to buy all those undervalued stocks. One major reason why the stock market could move up and down so fast?

Company fundamental and the business they are in? Not really. It’s the sentiment. Also known as herd mentality. Just look at the stock markets data below from Public Mutual. I received this as a Mutual Gold member. The year-to-date numbers for the stock markets are all in RED. No prizes for guessing. It’s the effects from COVID-19. However, the weekly change is mostly in BLUE; positive. One major reason cited was the reopening of economies. Yes, even Malaysia has relaxed the Movement Control Order which is only officially ending on 12th May 2020.

When we see the above, what do we do? Well, I think it is always wise to diversify our investments. If we own just properties today, it’s a good time to start understanding some stocks where the prices have already undergone a very significant correction but it has nothing to do with its business and more to do with sentiment. In fact, look around and we could even find some stocks where the dividend yield is 50% higher or more versus the Fixed Deposit rates.

This was what AMINVEST said of BURSA. “AmInvestment Bank Research has upgraded Bursa Malaysia Bhd to a “buy” as the research firm expects its earnings for the first quarter of 2020 (1Q20) to come in strongly at RM67 million on the back of higher securities and derivatives trading revenue.” Read their full assessment here. By the way, I do not own any BURSA Malaysia Bhd stocks and have no intention to buy any at the moment. I prefer high dividend yield bluechips instead. Buy low and keep for a while. Happy investing yeah and remember, one thing drives the stock market; SENTIMENT. This could change very fast.

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