Timing

I remember by near end of August reading a piece of news that someone at Morgan Stanley stood up and said he predicted correctly about the blown up of sub-prime mortgages problem. ahhhh, well, excuse me.... the news said he predicted that since 2005.

We all know the blown up really started to happen by end of 2006 (when HSBC reported loss in the business and largely increased reserve), if not more seriously in August 2007.

The gentleman was (finally) right about his prediction, but don't you think he has the timing wrong? And I think it is quite wrong. I have real examples too. Somebody told me by end of last year that Hong Kong Hang Seng Index was too high (by that time it's about 19,000), it should drop a few thousand points. If you check the index backward you will see the index did not drop below 19,000 up-to-date. In fact, it is now sitting at 29,000. This person is deadly wrong.

If you tell me some stocks someday will drop in price by whatever reason, it is not enough. You need to tell me when will it drop as well. And the best, by how much and how long. I know that is a bit too picky and greedy, but if the timing is totally wrong it can cost me all my hard earn money.

Now Hang Seng is sitting at 29,000. People ask me again - it's crazy, what do you think? I'm not good at predicting how far should it go. If you are a simply buy-and-hold-forever, it doesn't matter to you because you are not going to sell anyway. If you focus on riding the trend then you simply react to what is happening base on your strategy, but not to predict when the trend is going to end.