Is December good time to invest in stock market? That’s the question that I ask myself lately. I did not buy any stock after selling Tanjong plc stock last month. And plan to buy back it again now. But when is the question. Therefore, I did some research on the previous years’ performance on the month of December. Let’s see the history speak for itself. Anyway, past historical record does not mean that it will perform as same as before. Stock market is not predictable. But you can know it better by studying more.

December 2008 KLCI vs Dow

As you can see, KLCI gains around 4% while Dow at 8% on December 2008. Below are the record from 2007 onward…

2007 – KLCI 2% gain while Dow flat
2006 – Both around 2% gain
2005 – KLCI 1.5% gain but Dow 1.5% loss
2004 – KLCI 1% loss but Dow 2% gain
2003 – KLCI flat while Dow 5% gain
2002 – KLCI 4% gain but Dow 6% loss
2001 – KLCI 8% gain and Dow 3% gain
2000 – KLCI 6% loss but Dow 1% gain
1999 – KLCI 9% gain and Dow 1% gain
1998 – KLCI 6% gain and Dow 4% gain
1997 – KLCI 13% gain while Dow flat
1996 – KLCI 1% gain but Dow 1% loss
1995 – KLCI 2% gain and Dow 1% gain

Woo… There are lot of blue colour ~ gain. I have my answer now. The stock market for December 2009 will likely go up.

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Everybody make mistakes. That’s no a problem. But knowing it and without rectify it. Then it will be a problem. I thought stock market will rally until end of October 2009. However, it did not. Both of the stocks INTC and Tanjong that I target were flat in October. Just like Maybank Investment Bank asked traders to sell on 5 October 2009, a wrong prediction. Anyway, it is hard to predict stock market. And investor should not buy stock based on prediction but on the stock value itself.

INTC October 2009 performance

There are 2 important dates in October for INTC. One is the quarterly report announcement and the second one is employee stock option exchange date. I predicted there will be spike in price on both of the dates. But I was only correct on the first one. And wrong on the other ~ it is good for Intel employees because of the low stock option exchange price. But not for me who want to sell at USD22.50. Hmm… I have to keep it for another 3 months again.

Tanjong PLC October 2009 performance

Same apply to Tanjong PLC. Its 1H net profit increased 10.4% to 372.941 million. And it should be able to climb back to RM16.00 easily. But it failed to do so in October 2009. Luckily, I still have the dividend of 17.5 cents. Else, I will end up earning nothing for October 2009.

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The stock market did not perform well this few days. It did not perform like March and July. Maybe the bear is started to take over. Hey, bull. Where are you?

I missed the chance the sell INTC on 14 October 2009. INTC hit USD 21.27 that day. I did not sell because my target was USD 22.50. That’s still a long way to go. And it dropped until USD 19.68 on 28 October 2009. That’s 5.72% dropped. Ouch…

The lesson to learn… Don’t be too greedy.

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With the announcement of Reserve Bank of Australia (first of G-20 central banks) to raise key cash rate by 25 basis points to 3.25%, this mark the worst danger for the economy had passed. Bank Negara Malaysia (BNM) should hold the Overnight Policy Rate (OPR) until the end of the year. But most of the financial stocks price had gone up before the adjustment.

For example, CIMB stock price increased 16% in a month from RM10.48 to RM12.22. And most of other FBM KLCI financial stocks are performing very well too. However, have them gone too far? Anyway, people don’t care much about it. They just know that when the bull is running, keep buying. Just make sure that you know how to sell when bear is backed.

By the way, when the central banks increase interest rate == financial stock will go up.

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Are you buying stock at FBM KLCI currently? Or you are selling them now? Well… There is no exact right or wrong answer for it. It all depend on own perspective.

Quote from OSK Research…

There is still room before the market reaches the 50-day MAV line. Hence, there is still a possibility of the market retracing all the way to the moving average line from the recent peak. Anyhow, our view towards the near-term market will remain firmly bullish as long as the 50-day MAV line is not violated.

Quote from Maybank Investment Bank…

Tactically, all investors should dispose of their stocks and reduce their positions as the autumn period of great downside volatility will continue. The American and global markets will be under heavy selling pressure and may crash in large daily percentage drops. So, local investors may want to ask the question “Why buy now”? – as we expect significantly lower prices in the next month or two. For funds that maintain the select band of counters that prop the FBM KLCI up, any and every rebound would be an opportunity for smart investors to sell at better & higher levels. SELL! SELL! SELL! Don’t BUY anymore.

So what is your opinion? For me, I just bought some value stocks. Just want follow the famous investor, Warren Buffett who buy stock at the value price, or even better undervalue price.

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