At last checking in on ver. 15

Market sure is boring these days.

Hmmm Cheeroy, what's up with the ratings? I just noticed it. Anyway, I rated you Good, but no effect also?

Me too, but this drop really funny. Nothing special happening right? I think could be an indication of some bad news? Last bad news I heard which is not heavily factored in was the additional tax by the IRB on their inter-company interest free loan. They are disputing this though, so don't know if there is an outcome already or not.

Oh ya!! Haha must've missed the date. I didn't realise the ex-date was today. Hmmm but the fall is dropping more than normal though. And looking at the time & sales report, looks like there was heavy selling as well. Normally dividend ex-date, market will price it properly at the opening bell and adjust a little higher or lower, but this time looks like the adjustments was done over the entire day slowly coming down from RM3.38 to RM3.16 with several big sell-offs.

If it was really due to dividend, it would show a lower buy/sell price compared to opening price. But this time it slowly drops instead from opening price to the lowest of the day.

Repcoyeoh, you are OT already. Keep to the subject of Stock Market.

That's right, we can talk and discuss about how our stock market is affected by out economy or political stability. And even how it would relate to global currency tradings which will pull foreign cash out of the KLSE. That's staying on topic, but when you start talking about politics for the sake of politics and it's differences and defending your posts with a weak argument as above just for the sake of talking more politics. Then the discussion breaks away from the topic at hand and will de-generate into a flame fest which would benefit no one which came into this thread in the first place to discuss about the stock market and not the details of politics.

There are sub-forums and threads on politics already. No need to discuss about it here. And thus my suggestions to stay on topic rather than to escalate the discussion further.

Wow Vastalux IPO is so sad.

Keelim, here is a very good website to learn about the origins of the stock market as well as how it works.

Investopedia

Keelim,

With regards to your question why a share would plummet when there is a sell off is explain in basic terms in Investopedia. So I won't repeat it here.

But on the question why a big firm such as Merrill would be so worried about their future because their share prices is plummeting, you would have to look at how their coffers are financed. I believe the complexities of their finances are probably what makes most investors/traders dump their shares at these uncertain times. Maybe it's due to the complicated way their capital is being financed, then re-financed and the probably swapped with another form of asset which carries value and further used as a collateral for further financing and so on. These steps are taken to further amplify what they can borrow with what little they have. Leveraging is a double edge sword.

In the entire chain of their financing structure, the sub-prime issue suddenly de-values the step right in the middle of this chain. Now what happens is that downstream of this sub-prime assets is dependent on what the sub-prime assets actually valued at. So if the sub-prime assets are worth nothing, then if you follow the trail downstream all the way to their reported potential capital employed, it will also equals nothing.

It is because of 1 poison asset in their entire chain of financing is destroying all the value of their reported financing.

Note: This is not a comprehensive study of the subject matter happening now. But this is how I interpret how a single financial instrument can destroy the value given to a company if it uses that instrument to use as a collateral to leverage on other financing sources.

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Added on September 15, 2008, 12:19 pmKeelim,

Share prices you see on the quotation boards are what people like you and me decide. If I sell a share at $100, then the last done price will be $100. IF you were to buy the share again at $105 then the price reflected will be $105.

IF there are tons of sellers, and the buyers queue is not enough to absorb it, what happens is the sellers like you and me will have to sell to whatever bidders there are on the market. From $100 bid all the way down to $50 bid, if the sellers are large and desperate enough, they will sell all the way down to $50 before they think it is too cheap already.

Same with buyers, if the bulk of buyers waiting to buy a share and the sellers queue isn't enough to absorb the buyers, what happens is the buyers will keep buying whatever share there are on the market, whether it is selling at $100 or $150. The queues are snapped up like fresh cakes on the market until they find the prices are too expensive.

So in conclusion, the price you see on the quotation board is not calculated by a computer or based on a formula. It is just displaying current or last done price of the market which is determine by people like you and me.


This post has been edited by skiddtrader: Sep 15 2008, 12:19 PM

During IPO, the company will employ a brokerage firm as well as an audit firm to first value their assets then the brokerage will value their company based on current market sentiments as well as potential future profits. The brokerage firms will try to price the share to sell it completely.

If you noticed during the recent IPO of Vastalux in KLSE, no one actually even subscribe for it. It has less than 6% total subscription for their shares. Meaning either the price determine by the brokerage is too high and optimistic or people aren't interested at all. So meaning, the company will most likely sink upon listing.

While during the bull run in early 2007, some IPO which were listed got pushed up more than 100% upon listing and their subscription was over 6 times the amount offered. Thus different times, valuation of share are different.

Well there is no new tax for alcohol so it should not be adversely affected fundamentally. Actually with the financial turmoil, it may force more people to drink to drown their sorrows which may increase the revenue of Carlsberg.

Most of us have registered accounts with brokers with online facilities. For free ones you can check out KLSE.com.my

The house of Reps has yet to vote on it. Probably will say 'Yes' I think because most Republican reps voted 'Nay' the 1st time and the tax breaks that comes with the new ones should win them over. And the fact that the previous vote had 2/3 of Republicans saying 'Nay'.

This post has been edited by skiddtrader: Oct 2 2008, 11:35 AM

Hehe it's funny to read how Warren has warn of these events before and right now he is actually making people more scared and at the same time, he is buying whenever good companies approach him to invest. Really true to his own words of being greedy when people are fearful. The fact that he is parting billions of dollars means he has found a lot of great value already.

Market down 12 points so far.

I got no confident leh. I was so tempted when it broke RM3, but then I can't see the BDI rising again and the fact they are hiring outside help to cope with their TNB contract which is costing them a lot. At the moment no confident.

Yeah IOI should drop lower, Asiatic is almost catching up with IOI in price and IOI should be lower...

Well according to past trends, when CPO was near or below RM2k, IOI should be around RM3.5 and Asiatic should be around RM4.

Touch below 1000 points. Wonder if it will close below it.

It's a sign for you to "FATTT! FATT! FATT!!!!!!" hehe