PostHeaderIcon Violent Market Movements

By The Uneducated One

The recent weeks had been truly challenging. Due to the US
subprime woes, the world markets plunged to unbelievable depths
within a very short period of time. The Malaysian local bourse
was not spared, either!

Investors were gripped with extreme fear and simply dumped their
shares at whatever prices the buyers offered. Although my
partner and I had our thoughts firmly fixed on our goals, the
extreme negative and fear vibrations from the traders and
investors in the office were simply overwhelming.

It was almost impossible to think when every moment we were
bombarded with news of so-and-so lost so much, and so-and-so has
folded due to extreme losses, etc. It was horrifyingly chaotic.
My partner and I were able to hold steady, though, amidst the
chaos because we were not fighting the markets! We were on the
short side; meaning, we sold the futures contracts ahead since
we were anticipating the markets to fall. However, we never
expected the markets to fall to such steep levels! We covered
(bought back and squared off) all our positions on Thursday,
16th August 2007.

Armed with much money made in the futures when they went down,
we went into the markets to buy yesterday morning, 17thAugust
2007. We were like lions, roaring and buying futures contracts
and shares at super cheap prices. As we were buying, the markets
continued to plunge. Rumors were going around that the US market
would melt due to the subprime woes. Although shaken a little,
my partner and I continued to buy as we were sure that a
temporary bottom was very near, and the markets continued to

By lunch time, we were holding maximum position and the markets
closed at the lowest. My partner and I continued to watch the
other regional markets plunging during our lunch break. Another
fellow trader was kind enough to buy us some bread and drinks.
We ate quietly as our eyes were glued to the screens. The Nikkei
Index (Japanese Market) continued to plunge and closed at the
lows. The local bourse started to plunge immediately at the
opening after lunch. And so did the Hang Seng Index (Hong Kong
Market), which plunged to its worst level of the day, about 1400
points down! Our local market followed suit and plunged almost
4% in just half an hour.

The whole trading room was ghastly quiet. I was doing my best to
continually focus on my goals. Although I was feeling cold and
the fear vibrations around me were deafening, I just held on to
my goals and kept telling myself, This will pass. The night is
the darkest just before the sun rise. Have faith!€ At the worst
levels of the market, I was looking at a staggering paper loss
that was well into the 6 digit levels! Can you imagine that;
buying in the morning and by the afternoon you are looking at
losses of that magnitude! About forty minutes later, like a
miracle, the markets reversed and started to bounce back! The
index reached another support level that we never thought in our
wildest imaginations would ever reach, and it started to

As we watched the regional markets recover, my partner and I
went back into the markets almost on cue. We had a field day! We
were jumping in and out of the futures markets like it was our
personal playground. Every time it dipped, we bought and when it
rallied, we sold. By the end of the day we were up much more
then what we expected. As the market closed, we both sighed a
great relief and high-fived each other.

On the way home, we were quiet throughout the journey. I said to
my partner, You know something, if the markets had not come
back, we would have had some serious dents in our finances!€ My
partner smiled and said, Well, my friend, look at it from
another point of view. We did our homework well and timed the
markets almost perfectly. We did not go in blindly. We were just
off by half a day! What does that mean? We are improving! Like
what you always say, Nature is helping us fine-tune our skills.
The next time, we will do better!€

After a few moments of silence, he added, Besides, knowing you
and me, however badly we get hit, we always bounce back and
continue to grow because we have faith in our goals and Nature!€
I smiled, and nodded!

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