Kuala Lumpur Stock Exchange saw some “bargain hunting” today and there’s a reason I used that word. Analysts have been using “bargain hunting” as a mean to tell you to buy some, probably 20% of what you would normally buy in a “normal” day. And it normally associated with the period after the stock markets took some beatings or consolidations. Also the name bargain-hunting sounds cool, don’t you think?

And so, the KLCI (Kuala Lumpur Composite Index) surged by a whopping 51 points, the first within the last 6-years. And you happen to bargain-hunt some stocks “hoping” the worst is over, it’s not easy to see such a jump in index barometer, anyway. Can’t blame you as you might not want to miss the boat, right? But what will happen if today’s surge is a one-day affair? What if today’s U.S. close is the reverse from Friday’s gain? I bet you’ll hold on to your stocks tomorrow even if KLCI decides to plunge on 2-digit close.
Frankly, investing in this period of time is equals to gambling in the casino’s tables, with higher risk than ever. This made worse by the fact that you can’t easily short the shares. This is a period of volatility and depending on your local market’s flexibility, it might present the greatest moment to make good money or it might be your greatest nightmare.

What could make the investors’ optimism sustainable? No doubt it’ll be lowering the federal funds rate after nearly 14 months of leaving it unchanged. Most of the investors are hoping that the Fed might act again before its Sept. 18 meeting as it did Friday, when it cut the discount rate to 5.75 percent from 6.25 percent.

So, did you make the right move by following the crowds into the buying spree today at KLSE? I wish I could tell but one thing is for sure – there’s no “panic buying” today obviously. There’re more people watching the show than participating in it. Technically, it neither show the knife has reach the bottom nor does it show it’s a temporary rebound. It depends solely on the direction of Bernanke and if you happen to make profit, it’s time to lock it.

Other Articles That May Interest You …

• The Man who can Change the Market’s Tone – Bernanke

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August 20th, 2007 by financetwitter

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