Why rowsley and other penny stocks fall

Its scary to see rowsley drop 20+% in one day when its one of the popular stock of the period..

What exactly happened? Trading curb.

According to the business times:
SOME six weeks ago, this column warned of the strong likelihood that with the fever in penny stock punting threatening to boil over dangerously, local broking houses faced with rising credit risks or over-exposure to a huge speculative bubble would surely act to protect themselves by imposing trading curbs on many of the stocks.

This has now occurred - over the past few days, at least one large broker is said to have slapped limits on trading on the entire penny sector. Precise details are not known but it is thought that clients' exposure to each non-marginable stock is now limited to $50-100,000 depending on trading limits, and $300,000 in total.

Whatever the specifics, the effect has been painful - segment leader Rowsley Holdings, for example, has crashed from 51 cents just over a week ago to 39.5 cents now - a loss of 23 per cent that is bound to hurt those caught at the top when volume was much larger than now. Similarly, many other low-priced issues like SingHaiyi and WE Holdings that had been speculatively ramped up in the recent penny push have also seen their shares tumble in recent days, either as a direct consequence of trading restrictions or because of sympathetic selling from curbs on other stocks.

The point stressed in that earlier column was that while it is fine for houses to look after their own interests, the announcement of trading curbs has to be better managed as it is a material, market-moving development that could in theory benefit parties who had advance knowledge of their introduction.

We wrote then: "Since trading curbs have the potential to influence sentiment and affect many stocks simultaneously, it would ... be a good idea to figure out how best to handle such announcements. They are, after all, as material as company announcements but are thus far unregulated."

As it stands now, houses are free to slap curbs on trading whenever they see fit, and the announcement of such measures often in the middle of trading tends to catch the market by surprise, leading to panic selling and widespread speculation as to what these curbs are and which stocks might be affected.

The market's frontline regulator, the Singapore Exchange (SGX), must therefore take the initiative and examine ways of levelling the playing field in such instances.

Possibly the best way to accomplish this is for houses contemplating curbs to be required to first inform SGX of their intention to introduce such measures. Once this is done, the information can be disseminated to the public only after trading has ended for that day either via SMS notification to clients or postings on SGX's and the broker's websites, or both.

Announcements have to be clear and concise, and must include details of exactly what measures are to be imposed and which stocks are involved. There should be no room for ambiguity, and at the same time, there should be an estimate of the duration for which the restrictions are to remain in place.

In short, the means of communicating curbs must ensure as far as possible that everyone receives notification at the same time and that no parties are in a position to profit unfairly from advance knowledge.

Own opinion:
Many people are unaware of the existence of such trading curbs and its is unfair to the retail investors...

I believe More can be done to regulate the broker houses.. Or give prior warning to prevent panic selling..


8 Laws of Investing from the Millionaire Next Door

Just read an interesting article from Yahoo which i bookmarked and would like to share with you all... This author makes me think of Dennis Ng and how he scrimped and saved and invested wisely to become a millionaire through simple means Anyone can do...

Here goes the story: In the year 2000, my personal life and financials were in the toilet. I was in my early thirties, my marriage was breaking up and I had to borrow against my meager 401(k) funds to settle with my ex. My net worth was right around zero. Since 2000, I've managed to increase my net worth around $1 million during one of the worst investment periods in recent memory. And no, I didn't get lucky with company stock options, win the lottery, receive an inheritance or even rob a bank. 

I'm one of those "millionaires next door" who you may have heard about. My wife and I have two kids, ordinary white collar careers and a shared financial philosophy that has enabled us to build wealth even during difficult economic times. 

We call these our "Eight Laws of Investing." 

 Live BELOW Your Means - With everyone under the sun sending you pre-approved credit cards and offering special financing on homes, cars, appliances and furniture, it's frighteningly easy to obtain a lifestyle that's richer than your actual income. At our house, we carry no credit card debt and make sure at least 20 percent of our net income is left over to save and invest. If that means we can't have that huge pool or we have to buy a Toyota instead of a 5-series BMW, so be it. 

 Keep a "Rainy Day Fund" - It's almost inevitable that at some point you'll face an income disruption, whether it's from an illness, corporate downsizing, divorce or other unforeseen event. Having a rainy day fund in a liquid asset (an interest-earning money market account is a good option) that covers six months of expenses will help you avoid a nightmare scenario of racking up credit card debt to pay the electric bill or incurring huge penalties by cashing in other investments like 401(k)s, IRAs or CDs. It may take awhile to build up this fund, but when you do, you'll definitely sleep better knowing it's there. 

3. Take Advantage of Your Company's 401(k) Match - Though less companies do it these days compared to a few years ago, a 401(k) match from your employer is literally free money you should take full advantage of. At a minimum, you should contribute at the company matching level (for example, if your company matches the first 3 percent contribution dollar for dollar, your minimum contribution should be 3 percent). The compounding impact of this "free money" over time can mean tens of thousands of extra dollars in your retirement fund. 

 Dollar Cost Averaging - Simply put, dollar-cost averaging means making measured investments consistently over time. This allows you to create a kind of built-in hedge in your portfolio so you have less exposure to short-term market fluctuations. And avoid "market timing" at all costs. You might get lucky a few times (especially during rising market periods), but in the long-term, no one's smarter than the market. 

 Diversify! - Remember the saying about all your eggs in one basket? A good investor probably came up with that! Diversifying your investments across domestic stocks, bonds and international stocks spreads out risk and stabilizes your portfolio. There are lots of great articles on investment websites about how you can diversify based on your age and risk tolerance, one of my favorites being The Coffeehouse Investor (and just so you know, I have no financial connection to the author or the site, it's just a great common sense approach to investing). 

6. Investing in Index funds - I love index funds. You get the benefit of diversification coupled with low-cost "passive" management. The most popular index funds carry investments that track to well-known market indices (e.g., an S&P 500 Index fund carries the stock of companies that make up the S&P 500), enabling you to instantly diversify across the spectrum of companies in a particular market or industry. And many index funds these days have initial investment requirements as low as $1,000. 

 Take a Long-Term View - Over the long-term (meaning many years, not weeks or months), a diversified, consistent and disciplined approach to investing in low-cost index funds can reap great rewards. You won't see quick results, but by following the guidelines described in this article, doing a bit of homework and living below your means, over time you can build a portfolio that will weather short-term storms in the market and build wealth and security for you and your family. 

 Let Yourself Splurge, Within Reason - Just because you're financially responsible doesn't mean you have to live like a monk who's taken a vow of poverty! As long as you stay on track, with your spending, saving and investing reflecting your long-term goals, it's okay to splurge on the occasional ski trip, tennis lesson or new gadget from Apple you simply must have. 

So there you have it, eight simple laws. Not exactly rocket science, is it? And it shouldn't be. With a sound long-term strategy and a consistent, disciplined approach to managing your money, building wealth can be achieved even during challenging times. 


Stock Quotes from Carl Icahn

Many people know about Warren Buffett and Geroge Soros but very few people know about Carl Icahn. I read the recent news about how Carl Icahn is ploughing in his company into Herballife and got interested to do a post on him...
A little background on him

Born:New York City, in 1936
  • Icahn & Company (securities firm)
  • Icahn Enterprises L.P. (NYSE:IEP)
  • Icahn Partners (hedge fund)
  • Controlling ownership positions in several major corporations
  • Carl C. Icahn Center for Science at Princeton University
Most Famous For:The "Icahn Lift." This is the Wall Street catchphrase that describes the upward bounce in a company's stock price that typically happens when Carl Icahn starts buying the stock of a company he believes is poorly managed.

Since the mid-1980s, Icahn has had titanic battles with multiple U. S. corporations resulting, most of the time, in significant capital gains for these companies' shareholders and, of course, making Icahn a multibillionaire, whom Forbes ranked as the 46th richest in the world in 2008.

Icahn is viewed either as one of history's most ruthless corporate raiders or as a positive force for increased shareholder activism, who seeks to correct the abuses of greedy and/or incompetent corporate management.
~From Investopedia~

Carl Icahn Stock Quotes

  • I look at companies as businesses, while Wall Street analysts look for quarterly earnings performance. I buy assets and potential productivity. Wall Street buys earnings, so they miss a lot of things that I see in certain situations.
  • I have always lived by my word, so to speak. I think that’s the way to be… The funny, ironic part is if you do that over the years, it really pays off tremendous dividends.
  • A lot of these companies are undervalued because of poor management. You can replace bad management, right. So that’s one big hidden value there.
  • I think I’m good at what I do. I think in the takeover business I would say I’m as good as anybody in this area… I have a good mind for this type of thinking. It’s like a chess game. I was always a good chess player.
  • What turns me one, is the excitement of it all. I really believe in what I’m doing. Don’t get me wrong. I like to win. But I love to rock boats that should be rocked. Sometimes I wonder why I keep doing it. I’ve got enough goddamn money.