Far East Capital Newsletter
Buyers are not back in the market, so it continues to fall
30 Oct 2016

In This Issue


Buyers are not back in the market, so it continues to fall

The observation that the markets have receded into a very quiet mode is a reminder that sentiment in the market comes and goes. It behoves the market to be able to hold on to one theme for an extended period of time.
For those companies operating in the real world, requiring periodic financing from equity markets, it may be difficult to understand why investors will be all over them in, say July, but then be totally disinterested only a couple of months later. Real world business conditions may be consistent but investor sentiment will fluctuate dramatically. Investing in the market today, and taking new equity, may be an act of charity when there is no FOMO. Then again, it may well be the smart time to buy - when there is little or no competition from other buyers.
The reality of the market is that most buyers only want something that someone else wants. They lack the fortitude to be able to pick a price level at which probability analysis suggests they should be bought. Similarly, they are reluctant to sell when there is enthusiasm in the markets. It is always a challenge to isolate one's thoughts from the herd mentality, but that is a necessary skill if you want to be a consistent winner in the market. You will have heard this advice many times before, but how often do you act on it? 

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