Tuesday, February 24, 2009


What should investors do during tough times? As cliché as it sounds, cash remains king when times are tough and investors should hold cash at the moment, said professional futures trader Brent Penfold.

“Although no market is linear and goes down forever as prices will recover and good times would present themselves again, in my opinion, there is no rush to invest in shares now,” he told The Edge Financial Daily via email recently.

“At the moment, it is best to continue to be patient, remain in cash and preserve capital,” said Penfold, who had been trading for over 23 years since he joined Bank of America as a trainee dealer in December 1983.

Penfold said he remained bearish on the Kuala Lumpur Composite Index (KLCI). “The Malaysian share market would continue to struggle whilst the KLCI remains under 1,072 points,” he said, adding that he had been negative on the index since March 2008 when it fell below 1,247 points.

At 889.71 points last Friday, the KLCI had shed close to 37% of its value over the past one year. The fall was in tandem with other bourses on concerns over a deepening global recession. Year-on-year (y-o-y), the Dow Jones Industrial Average had lost 39% to 7,465.95 points on Feb 19. Meanwhile, the Singapore Straits Times Index had fallen 47% to 1,594.94 points, while the Hang Seng Index had lost about 47% to 12,699.17 points.

“I would not be trying to pick a bottom here,” Penfold said. He also said it would be prudent for investors to remain cautious. “Looking at the US and China, the world’s two most important markets, all I can see is negativity. Negativity for me means patience. There is no rush to invest in any shares at the moment,” Penfold said.

He had authored Trading the SPI and Back to Basics Trading. He is also featured in the daily newsletter IndexALERT. Penfold would be presenting two papers — Index trading strategies to grow your capital in uncertain times and Cycle Point — at the Asia Trader & Investor Convention on March 14 and 15 at the Kuala Lumpur Convention Centre.

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