To expect the unexpected

(Posted Sunday, 530 pm)

The main point of this post is a discussion on expecting the unexpected. Look at how the market reacted when the unexpected were announced.

It is a no brainer. If we can expect the unexpected, all of us will be rich. The surprise last week were

·         the coordination of Central Bank actions AND

·         The 50 basis point cut in China’s RRR.

What’s even more surprising is that the news came together. This resulted in an even bigger rally.

The other recent occurrence was on Oct 26^th thereabout. The event were

·         The EU summit announcement of the Greek haircut, bank recapitalization and EFSF

·         The very favorable announcement of the Oct US GDP data

Again, the combination of two big news on a single day contributed to the HUGE rally in high yield assets, commodities, currencies and the equity markets. Though the Oct 26^th event did not really take off well, the markets did not test the support levels again (yet?).

Fortunately, the news was favorable. BUT what if the news were unfavorable and what if there were more than one bad news on s single day? To expect the unexpected and taking pro-active management before the event can certainly maintain or generate potential returns. (I believe that my posting before the markets melted late Q2 and early Q3 was of benefit to your portfolio!)

If you can contribute, thefinance.sg would certainly be the place to post your comments. Let’s bring our brains together and prosper! It will be alright if you remain anonymous, even better if you like to put a nickname!

Thinking out of the box by expecting the unexpected would certainly generate high potential returns but I am one, the audience is many!

 Happy investing and have a great weekend. The jungle warfare begins tomorrow when New Zealand opens at 2am Monday morning!