ONE step forward and two steps back – this seems to be the direction that stock markets across the world are taking after hitting their highs for the year last month.
On Tuesday, market jitters were becoming audible, with the Wall Street’s Vix index – which measures the volatility of the S&P 500 Index – hitting its highest level since March.
While US stock index futures predicted another jaw-dropping fall on Wall Street, legendary investor Warren Buffett struck the biggest deal of his life – a US$26 billion (S$36.4 billion) purchase of Burlington Northern Santa Fe – in what he labelled as his "all-in wager" on America's economic future.
The question again being asked, like last October when he made huge bets on Goldman Sachs and General Electric, is whether Mr Buffett is losing his Midas touch.
He was even willing to issue new shares of his highly-prized investment firm Berkshire Hathaway as part of the purchase package to complete the deal.
But investors had their eyes firmly fixed on the communiqué to be issued by the US central bank at the end of a two-day interest rates fixing meeting tonight.
Despite splurging so much money on a single deal, Mr Buffett failed to move Wall Street at all. The Dow Jones Industrial Averages ended slightly down, spooked by renewed concerns over the business outlook of the US financial giants whose problems had sent the global financial system reeling last year.
What to make of all the mixed signals coming from Mr Buffett and the rest of the US markets so far?
As I write, the benchmark Straits Times Index is up a meagre 17 points to 2639.03. But it is still way below the high-water mark of 2,716 reached last month. Like investors elsewhere, the players here are keeping their powder dry, as they wait for the dust to settle on the latest bout of market uncertainties.
But as my small change column "On the trail of smart money" suggested, a retail investor should track the moves of shrewd market operators like Mr Buffett to time their own purchases for the long-term.
Mr Buffett has, as he had succinctly put it, put both his words and money where his mouth is.
I guess that even for an investor of Mr Buffett’s age – he is after all pressing on to 80 years old – taking a long-term view of companies and economic trends often wins out when they are temporarily depressed by short-term uncertainties - something which I hope to take up in a future small change column.
He may not be making money on his latest "elephant" purchase for years. But then Rome is not built in one day. He may yet be proven right on his latest bet on America’s future.
On another note, I have received several queries from readers to my the latest "small-change" column on how they can track insiders' trades.
The ST publishes a list of insiders’ trades every Friday which highlight some of the big trades of the week.
To get a better handle of the trades themselves, it is best for a reader to identify which corporate titans they wish to follow and the stocks they regularly trade. As these biggies are often the biggest shareholders of the companies, their trades will be reported on the Singapore Exchange website.
Just tracking a couple of trades will not give the reader a hang of the views which these insiders hold on their stocks. You will have to track them over time – months or even years to do so.
One last note: I have made the effort to write the market blog regularly with a view to give online readers a handle on market directions and highlight possible trading trends. Over time, I hope to attract readers to give their views and turn the blog into a vibrant discussion on the market.
The blog has recently attracted comments on topics opposition politics which is inappropriate to the topics being discussed here.
I am glad that some readers have endeavoured to point this out to those polluting this blog with their irrelevant comments.
Those people who are unhappy about non-stock market issues should really air their grievances elsewhere and leave this space for those who are keen to learn more about the equities market and grow their nest-eggs.