Why financial markets are not going your trend?

Financial markets are not predictable.

Financial markets are not logical most of the times.

Most would wonder why Asian equity markets plunge while US Dow rallied for a third day or US markets ended mixed.

While

·         China’s ‘good news’ rate cut spooks market from MarketWatch

·         Bernanke Sees Easing Options While Not Specifying Them from Bloomberg

·         Spanish Banks Need $50 Billion: IMF Report from CNBC.....

The rate cut was NOT a surprise. My post on China Making Contingency Plans for a Greek Exit would have pre-empted you that China was on to something! Though missed by many while interpreted with a different mindset would have resulted otherwise.

Bernanke is Bernanke. How well do you read Mr. Bernanke? As in my earlier post, he is a patient strategist. His moves and actions are well supported. My opinion is that his decision to utilise the appropriate tool or tools would be when he has sufficient data to react. Meanwhile the FOMC is not convinced to react given the current financial market. It means there is room to fall.

IMF. Is $50 Billion sufficient?

Markets movements are based on ‘speculations’ and hopes. If speculated wrongly which I believe the current speculation is WRONG, the reality takes control.

In addition, was that a coordinated Central Banks action? Is there volatility? Or is there more uncertainty? What’s going to happen on June 17^th or 18^th?

Why are my posts different from others? My question to the audience is do you see, hear, smell the ‘happenings’ in the financial markets? Do you utilise your senses? Hence, you would be able to TASTE the success in the journey of investing!

Learn and educate yourself at a higher level – above average. Outsource - if you do not have time or if it is not your cup of tea. Doors are always open to queries. Have a great weekend!

Declines in Asian Bank, Property Stocks Yield Rich Dividends

The above headline is extracted from CNBC.

Pause. (While you are reading the headline thru the hyperlink generated). Hyperlink - fixed; There were amendments to the original title and hence the link!

What comes into your mind? Think out of the BOX?

There are several (many, in fact) that crosses my mind. I like to post, just two points that cross my mind.

First of all, many would agree that the current market situation is volatile, very volatile to be correct. Hence, one of the options in diversification as suggested by the author is ‘income’, dividend or interest.

However, investors should know their risk profile, time horizon and investment objectives. More importantly in relation to the above are your investment objectives.

Investment objectives could be

·         Capital appreciation, moderate, aggressive, etc

·         Stream of income

·         Or both.

Hence, the above is more suitable for investors whose investment objectives are a stream of income.

In the article, did you notice the range of dividends being declared?

Question? Which investment of yours generates an average dividend as declared in the article. Would your

·         savings account,

·         CPF account,

·         SRS account, etc

Generate a similar amount of dividend? The point suggested here is stream of income and NOT capital appreciation or otherwise. So no arguement can be generated.

(I find most investors do not have a clear investment objective, hence the investment advisor has a more difficult task to respond to.)

Now that you may (may not) have understood the above, you may wish to decide (or otherwise) to diversify your investment portfolio accordingly.


However, there's still a worry! Are you familar with the current rate of inflation in Singapore? Whatever, the value of your assets are being eroded! Are you taking going to take risk or simply watch your purchasing power loses it's value?

Point (2). Dividends are attractive. Have you ever notice how much your insurance cash value is generated on an annual basis for your whole life policies? I am trying to relate dividends and whole life policies declaration of bonuses, if any. Are there any whole life policies that generate more than 3% (just plucking a figure) on an annual yield basis?

Is the above ‘food for thought’? An avenue to your insurance portfolio diversification? Is your insurance advisor recommending similar alternatives? Does he have the license to advice on most investment solutions? Did he put 1 plus 1 together?

I am just sharing a penny’s worth of thoughts or advice while monitoring the market and pending my thoughts for the audience. Or perhaps, some audience still do not know what my point is?

Have a great day!

Read next-->Two bold predictions for Singapore
SUN TZU Art of War
Greece needs more than an AMD
Boom Gloom and Doom

Sun Tzu Art of War

Most of us have heard of SUN Tzu. There was a ‘rumour’ Sun Tzu wrote a script on the Art of War. After his era, kings, prince, emperors, etc were searching for the script. Eventually the script was found.

One of Sun Tzu’s knowledge was related to understanding the weather. You may have heard how he used the weather to his advantage to win his battles (544 BC - 496 BC) during the Warring States Period.. In one battle he 'forecasted' the eclipse of the Sun to surprise the enemy.

Courtesy from Anonymous: Another well known strategist, Zhuge Liang (181–234; lived during the Three Kingdoms Era, of the China history; a latter period than Sun Tzu), who studied the stars, astronomy and weather patterns "borrowed" the East Wind to defeat Cao Cao at the battle at Red Cliff.

How does this relate to market trends?

The above is related to understanding the weather or climate. In this case, the financial equivalent is relating to the macros, economic data, geo-politics, music and noises happening in the financial market. And to filter/massage the actual events.

While most of you invest in counter stocks, foreign exchange, etfs, etc you are either ignorant or ignore the above or choose to ignore the above. But I hope the above would generate interest for you to equip yourself with the financial climate. Hence, you would have a better understanding why equities will behave more illogical than before!

Others in brief. The above is Understanding the weather.

·         Do you understand yourself? Risk profile, tolerant, patience, discipline,etc

·        Do you understand your terrain? Just stocks? Units trusts? Forex? Etfs? (For diversification)

·         Who’s your friend or enemy?

Without a ‘set’ of the above, how do you read the financial market? Who are your enemy? What sort of ‘terrain’ do you understand and use to your advantage? Etc...

If you admire Sun Tzu, his knowledge, the history he created and to relate how his Art of War manual can be used to your advantage in your personal investment, please equip yourself with knowledge, plan a strategy and execute your strategy with discipline.

In other words, please stop trading and investing blindly. I’ve witnessed

·         too many investors being slaughtered, time and again, without understand where is ignorance IS!

·        banks, investment advisors who does not have any idea what is/are financial markets, hence

·         without understanding the climate, how does he have a plan/strategy

·         how does he plan to go for a battle

·         What tools, strategy would he use, etc...?

·         How does he provide professional advice???

Remember and note: When you invest, you are strongly advised NOT to buy the stock, the Forex, the UT fund, the commodity, etc (all these are 'dead') but the 'advice' of your professional investment advisor because his best product is his advise!. Choose your investment advisor intelligently.

In conclusion, if you still do not understand what I am trying to relate, take my advice. Do not invest.


If you agree with the above AND you wish to help your friends, please forward the post to your friends such that they may understand investment better. The finance.sg is just one collection of financial bloggers. Your assistance and loyalty will enhance the blog and me and YOUR firends. This equates to a win-win-win situation!

On a separate post, Greece needs more than an AMD, in a situation where an individual is on a life support system, he is supported medically by life support machines. In this case, Greece had been financially unsound for three years on a life support system draining the finances of his siblings (Europe), currently has no government and a decision, whether to continue on the life support system in mid June through elections is NOT the solution to Greece problems.

Fortunately, Greece had a chance to 'wake up' from his 'coma' and decides on election day! There's more to this or the AMD...

I hope the above will assist you to relate the situation is Greece from an AMD point of view and the future of Europe and trading partners of Europe! 

Read next post:

Declines inAsian Bank, Property Stocks Yield Rich Dividends

Boom Gloom and Doom

When all seems Boom Gloom and Doom in the month of May, the reverse happens.

My posts had been helping you, ‘the audience’ to avoid bear markets as far back as May 2011 and market rally as far back Nov 2011. In my previous posts on market trends

Tug of war - Bull vs. Bear Ends. Financial market plunges. What's next

The following abstract...

“However, having provided all the bad news.... here comes my technical reading.

Technically, RSI and various indicators signal ‘oversold’ levels. The big boys, fund houses may have program buying at key technical support levels. Hence, there’s a strong possibility the market would take a short breather from these oversold positions.

Following which markets may rally depend on the rebound or if short covering is triggered. We’ll cross this bridge at the appropriate time”.

1. Coincidentally, US and Europe markets reversed course following my post. The US and Europe markets returned a positive week after string of weekly losses! How coincident!

2. The last Para may/may not happen and it depends on situations and events.

3. The above remark can be found in many news provider which included and warned 'signs' still show a sell trade, which i omitted from my post as a result of 'my set' of technical indicators which differs from theirs!

The Greek election is in mid June. Between now and then, this week is pack with heavy data

·         Initial jobless claims, ADP reports, nonfarm payroll, unemployment data

·         US GDP

·         China PMI

Would we continue to receive weak data from US and China? Guess work is not in my dictionary.

Read next -->
Greece needs more than an AMD
Two bold predictions for Singapore

  

Tug of war - Bull vs. Bear Ends. Financial market plunges. What's next

The above article commenced mid February with Part 2 in March and Part 3 in April. My benchmark for the tug of war list of events is the DJI ranging from 12800 to 13000. I had picked the above title, then, is because my speculation was that market would trend sideways until the next key events.

The DJI did not reach 13800 which is my technical resistance. The technical support was 12,400 which were breached last week. This demonstrates the risk-reward that was not favourable where market prices IS too high.

In Part 3, I speculated that the market would undergo a correction which you all probably know the answer by now.

Last week, DJI closed below 12,400 together with S&P500 and Nasdaq closing down for the week back to back. Hence, the tug of war or range trading had ended. Leading to the correction were the following list of events:

·         GDP were weak then

·         Currencies were lower (not USD) signalling higher inflation

·         Trade figures were generally weak

·         PMI were generally weak

·         China data continues to be of concern

·         Europe is a primary concern – Greece, Spain, etc

·         US GDP and nonfarm payrolls were weak (not an exhaust list)

·         Adding more insult to the market correction.

The above signals weak growth, higher inflation. This leads to my concern. Aren’t Central Bank and governments in a dilemma again? Monetary policies? Pardon my language – Screwed and f!@#$d??

However, having provided all the bad news.... here comes my technical reading.

Technically, RSI and various indicators signal ‘oversold’ levels. The big boys, fund houses may have program buying at key technical support levels. Hence, there’s a strong possibility the market would take a short breather from these oversold positions.

Following which markets may rally depend on the rebound or if short covering is triggered. We’ll cross this bridge at the appropriate time.

Carry trades

The global sentiment is risk-off. Volatility is high. This leads to unwinding of carry trades in currencies. Hence, safe haven currencies are sought after. The Yen and US dollar rises. Other currencies including commodity currencies weaken. This leads to a fall in commodities – mining, agriculture, etc.

Fundamentally, economic data are weak. There are global growth concerns. And without any geopolitical situation in the Middle East, Oil prices fall. That’s the good news!

Gold. The previous posts ended with Gold testing US 1790. The demand and supply would be determined by QE3 and the US dollar instead of safe heaven. With NO QE3 in sight then. I mentioned fat hope. As expected Gold plummeted to my mentioned support of US$ 1530 thereabouts, did anyone catch the price there? With NO QE3 in sight and if Gold would extend the rally, then I suggest you review your bargain hunting strategy in your investment portfolio.

At the moment, do NOT go all out and buy whatever your reasons is cheap PER, low RSI, etc but simply follow your simple strategy on entry points coupled with a determined discipline to cut losses. Dollar cost averaging will be strongly recommended for a 6-12 months time horizon.

On a separate matter...

Properties. This is probably your biggest and longest investment. Most, if not all would take the longest tenure. Here’s the problem most of you do not see. You’ll be paying the biggest loan and let the bank earn your money. Your principal gets lowered very very slowly. But, while interest rates are low, it is favoured to take the shortest term and lowest loan.  Your interest gets paid more and your principal gets reduced faster. If you chose the former, most of you will be in a BIG financial problem when housing loan rates accelerate to 2-3% and higher. More cash would be paid, affecting your cash flow and liquidity. Review your refinancing loan to avoid this very probable disaster you ever make.

The main point here is future afforability. Do not be blinded by low interest rates. Do NOT stretch your loan. It's ONLY a short term benefit. On the flip side of the coin you should take the opportunity of paying less interest at a shorter tenure with the lowest loan! Anyone disagrees with this point?

Tug of war - Bull vs. Bear Part 3

Here comes the correction! If you had followed my post, I seriously hope you didn’t buy HIGH and (later) SELL low with fear being the current sentiment.

Since my last post in early March, the title post remains the same, ‘Tug of war’, meaning I called for markets to trend sideways. My speculation then was that the equity market would not have any more energy or the catalysts to proceed further north.

The title post is the same, with the exception it is part 3! It is still finding direction and definitely not the finale!

Let’s look back with hindsight. If you had tried to chase the market after mid Feb, the risk reward, by calculation would not be attractive at all. By buying ‘very’ high (which I WARNED) there will be more worries and no excitement at all.

Since mid Feb, markets eked higher but corrected when the Fed Chairman made no mention of QE3. And when the sentiment was bearish enough ‘helicopter’ Ben hinted that QE3 is not off the table. Markets reached out higher where it gave the sentiment that the rally had resumed.

Enough act from America I think. Here comes the next scene but from across the Atlantic. It’s no longer Greece but Spain. Spain bond auctions were not well received. Risk off was the then sentiment. China PMI releases and weak data made the puzzle more interesting.

The story goes on and on, up and down, weak and good, etc with the last straw – weak data release where US nonfarm payroll – released on a ‘Good’ Friday where most markets were closed. ‘No horse run’ is my best bet where most investors could not exit.

If that doesn’t hurt sentiment US Equities saw further heavy selling as, across the Atlantic, European sovereign debt worries moved back into the forefront. Selling of peripheral debt caused the Italian and Spanish 10-yr yields to spike.

Markets had been playing investors like a yo-yo. (I am the spectator.) Fortunately, if you followed my post you would not have been a victim. The yo-yo is still-in-play and calculated events would determine the ‘buy’ entry.

US markets had closed badly with an average lost of 1.7% bringing the Dow and S&P 500 back to 12,715 and 1358 respectively. The market made a turn and came back where it was where I last posted! My speculation is that the US markets will pass the baton to Asia then to Europe. Earnings season should dictate henceforth.

Alcoa, a Dow component triggers earning season by beating estimates after the bell.

The BLOG post that precedes the headlines
ONE step Ahead

Buy HIGH sell LOW, Huh?

A sea of red from Asia, UK, Europe and to the US....

It was just only a week ago where most, if not everyone were so excited with the global market rally.

The US major indexes were testing the resistance;

·         Dow Jones Industrial was at 13000

·         S&P 500 was at 1370 and

·         Nasdaq was at 3000.

(Did you read my post on Feb 7^th – Did you know? The BDI theory and four weeks henceforth....)

Similarly, emerging markets, BRIC, Europe, and Asia Pac were extending their weekly gains.

Newspapers, financial magazines, online financial providers were teasing the audience (especially those who missed the January rally – Tug of War – Part 1).

As you all probably know, I exited in mid February – safe and sound with a handsome profit.

The big boys, fund managers, big fund houses were also keen to take profit. However, to take profit they need to sell. That’s a very good point.

(Tug of war – Part 2, the direction the market was heading was unfolded. I was being polite by telling the audience, not to be a ‘sucker’!)

They want to sell but who is going to buy? The fund managers, fund houses, big boys bought low in Oct/Nov and they want to sell high at around late February. Yes, you guess right. Those who missed the boat, etc might just be the buyers; the big fund managers, fund houses want to sell.

The news acted as the middle-man (putting a carrot for the greedy and the ignorant).

Imo, once the ‘quota’ is achieved, Murphy’s Law will step in. You may just watch how the US markets will open tonight in the next 30 minutes.

My important point for the above post is that Be very careful on news that you read – you may just be the substitute the market is looking for.


Updated 11pm, Singapore time. Note that the current low is 12,800. If DJI closes below 12,800, the next support level would be 12,300-12400 level.

My next strategy:

While investors may start to fear, I would be watching very closely when this correction would end and planning my next few entry points.

The BLOG post that precedes the headlines
ONE step Ahead

Tug of war - Bull vs. Bear Part 2

A similar post was published last week on Feb 23^rd. Since then, there were a lot of happening in Asia and on both sides of the Atlantic.

As you probably know, Europe was overwhelmed with their 2^nd LTRO, US had a better revised GDP estimate, expansion in Manufacturing data from Asia to US and Bernanke’s testimonial. There were lots of volatility with the commodity currencies strengthening; the Euro weakening, Gold and Silver plunged! The price of Crude Oil rose from an Iranian report of an Oil pipeline explosion in Saudi Arabia.

How exciting? Let’s see where the Dow Jones, S&P and NASDAQ closed off for the month of February?

Hmmm! It seems like all the 3 major indexes had tested the resistance. Well, today is Friday and it would be interesting to note how the major indexes would close for the week. But on the whole, the activities is still displaying that there’s still a tug of war between the bulls and the bears. The indexes are still range bound. Huh? How boring? Tempted to go in?

I had received many emails and queries. Should we chase the market? Can we buy now? Now we all know;

BUY low and SELL high.

Isn’t this a very simple logic? What’s my point?

The levels we are seeing today for the Dow and S&P was last experienced in 2008, the Nasdaq is at 2002. We also know that the bottom was somewhere in March 2009. Hence, we’ve reached back to the levels of 2002 and 2008. What does the level of US index tells you???

Are the current levels at the high or the lows (of this trading range)?

Are you going to take profit or wait for more profit? Risk-reward?

Are you taking on more buys or adding new position?

We all know that we should buy LOW and sell HIGH. If you were to buy know, are you buying at the low or high?

What is the risk reward for accumulating new buys here or if you were to take profit here?

I hope I made myself CLEAR. You are the decision maker!

If you find this post informative, please do not hesitate to forward this to someone who might agree with this line of reasoning. Thanks in advance!

Focus for Feb 29th 2012

In my previous post, US Consumer confidence is high, what’s next? The focus was on US confidence data and oil prices. However, the focus for Feb 29^th was different.

Amidst the news released for Europe’s 2^nd LTRO, US GDP 2^nd estimate of 3%, better Chicago PMI data, am I correct to say you would expect that the US indexes would have surge north? Not so fast!

At point of writing and after Fed Reserve Chairman’s testimony to Congress, my opinion is that the speculation for another round of quantitative easing to stimulate growth was seen easing. This is the focus. And the US dollar strengthens.

As previously mentioned, the obvious primary beneficiary to additional QE is gold. And I was not surprised that Gold plummeted by 4.29% or US$ 76 to US$ 1711.70 at point of writing.

Unless the yellow metal changes its characteristics, and as long as QE is not on the table, I doubt there will be a rally in Gold amidst the speculation of most Gold Gurus; US$ 2000 and above. I would say FAT hope for the time being. I would stay away for the time being.

Black Gold as they were to call oil in the good old days also lost about 1% to US$ 104.90 thereabouts as a result of a stronger US dollar.

For the benefit of new audience, Gold had rallied back from US$ 1500 thereabouts to a current high of US$ 1790 as a result of hopes and expectation that the US Fed would provide additional monetary stimulus. While QE was on the table, the US economy got stronger and stronger. Gold got stronger as hopes for QE was still very high! But when the Fed Chairman did not hint any QE in his testimony tonight, the obvious had to occur.

I am not sure how the US indexes would end tonight but at least there’s some growth recorded for the month of February.

Tomorrow is a new day and the highlights for Asia would focus on China’s PMI and Fed Ben Bernanke (2^nd day) testimony to the Senate Banking Committee.

US Consumer confidence is high, what’s next?

As you probably know, the US indexes closed ABOVE psychological resistance last night.

The Dow closed at 13005.10; S&P500 closes 1372.18 while the NASDAQ closed 2986.76.

There were 3 economic data released last night;

·         Durable orders at -4.0% vs. -1.4% expected; Durable Orders ex Transportation at -3.2% vs. 0.2% expected. This is very negative

·         Case Shiller 20 city index at -4.0% vs. -3.6% expected. Another weak data.

·         Consumer confidence at 70.8 vs. 62.5.

And the market (preferably) focused on the Consumer confidence data, overshadowing (ignoring) the weak housing and durable orders data!

Huh?? With a strong showing of consumer confidence that leads to global growth and hence global demand for crude oil, oil prices experienced a sharp drop. Huh?? Imo, the oil traders (having a different mindset/analysis) were focusing on durable orders rather than consumer confidence??? It is their analysis, not ours.

In conclusion, the US markets closed on a very positive note as a result of favourable US confidence data and a drop in oil prices (while ignoring the weak data???). What if the US data were strong and the US consumer confidence were weak? Would the US market rise or fall?

Penny for your thoughts; The above shows that the market is exceptionally bullish. The market is ignoring ALL kinds of noises and focuses on favourable data. (Hence explains why I include global investors’ mindset to technical and fundamental analysis.) This could also mean that while today being Feb 29^th, the GDP data, Europe’s 2^nd LTRO, etc the market’s mindset could either head further north or trigger a sell to book profits

What would I do? The very fact is the market is very bullish. There is a lot of uncertainty this week with data coming from US, Europe, China and Japan. Uncertainty is we do NOT know what data is to be announced and how investor’s mindset will react as a result of the data. I would prefer NOT to gamble with uncertainty this time and stay on the sidelines.


Latest update: Wall Street will be listening closely to Federal Reserve Chairman Ben Bernanke over the next two days for any signs of distancing himself from the central bank’s pledge to keep rates at ultra-low levels for up to three years. Bernanke is testifying Wednesday in front of the House Financial Services Committee and Thursday in front of the Senate Banking Committee as part of his semi-annual report to Congress on monetary policy.

Another WTF happening, Feb 29th 2012

If you’re invested, you should take note of Feb 29^th. It’s a Wednesday. It’s also the end of month, lots of volatility due to month end closing. Thursday is the beginning of a new month where real money tends to come in. And Friday is the end of week.

In addition to the above, Feb 29^th has important US data namely US GDP 2^nd estimate, Chicago PMI, and the Fed Beige Book. All of which may lead to where March will trend. Across the Atlantic, the 2^nd tranche of LTRO is seen to be in the range of 500B-750B Euro (The first LTRO saved the EZ in Dec 2011).

With activities crowded on or after Feb 29^th, I would assume that markets will tend to be cautious prior WTF. Till then, household lizards will continue to test the DOW 13000 and S&P 1370 resistance. Whether they continue to attack the resistance levels depends on data and news of Feb 29^th.

HSBC had announced the flash PMI estimates of China earlier this week. China will announce their PMI data on March 1^st. Asia and Europe markets should take the cue from then onwards.

Though I have not posted any activities from Iran, I believe it’s time that our radar focuses on the activities there, too. As you probably know-hear/say of their Uranium program, energy prices had increased with a US$ 10-15 premium. Indirectly, this adds on to costs and had affected global growth.

The price of crude oil has risen from US$ 95 (to US$ 100) to the current US$ 105 (to US$ 108). This rise HAD dampened growth concerns in emerging markets like India and Indonesia. The hardest hit EM is Indonesia where the fall in the JKSE this week had wiped out the entire rally since Jan 2012. India had fallen 600 points from this year’s intraday high of 18,500.

On a separate matter, Insights had breached the 5000 pageview (this month) – a personal best and is nearing the 6000 pageview level. Again I would like to thank the audience for frequenting my posts. Please do not hesitate to forward/share my posts on reaching a larger audience. I sincerely hope that my timely posts and information assist you in making your investing decisions. THANK YOU.

Is a market correction coming?

The Dow is being attack by household lizards at the 13000  level. But, that is as far as it can go - similar to household lizards which loiter just around the ceiling.

On the other side of the Atlantic, the Greek deal is done. It is history. There is no default (yet!). The can is just kicked further down the road.

I repeat, "The Greek deal is done". What’s next? What is the GDP and Baltic Dry Index (BDI) and Retail Sales telling me?

Sometime back in my earlier posts, I mentioned that global GDP is getting weaker in most countries. The number is still rising at an alarming rate (and I am concerned, are you?).  The latest update; 21 countries registered a negative QoQ growth namely,

·         The Euro area, UK, Germany, Spain, Italy; and

·         Taiwan, Indonesia, Singapore and Thailand (which registered the largest negative growth of -10.7% QoQ and -9% YoY).

While the BDI projected better PMI data back in Q4 2011, the latest BDI trend is projecting weak PMI or factory orders. Coincidentally, this week – the HSBC Flash PMI for China, the PMI readings for part of Europe had been weaker than consensus. Am I correct?

I will not go into details of how many indicators assist me to make decisions, but I would like to share the above with you. Hmmm, something is amiss! There seems to be one more data that is not within my radar. Can someone share/hint what could be 'the' trigger?

At end of Q2 2011, my indicators help me speculate global bear markets; at end of Q3 my indicators helped me to speculate bear market reversals.

My reading is that while the long term trend is very bullish, the short term trend would be met by a mild correction in the next 3-6 weeks. The above is just a speculation. I have done my sharing.

If you’re still invested, you should ride the waves as long as possible. However, you need to position yourself close to exits.

As of current, I had made three speculations on Market trends so far. The Market has proven me right TWO times. Will I get it right for the third time? Again, TIME will be the judge. What’s your opinion?

I really would like to hear from the audience, that is, if the above indicators mean anything to YOU.

On a separate matter, I had been receiving an awesome number of pageviews this month - probably a record exceeding 5000 before the month is up. Thank You.

How long will this rally last?

(Posted on Monday 1am)

The US equity market or in any stock market, as usual, is ahead of the (US) economy. When US stock/indices start to rise in October 2011, the US data started to improve, right? Most of the US data had been pretty good so far, with the latest being, the Non Farm Payroll and Unemployment data.

With the exception for the Euro Zone; the US, BRIC, emerging markets, Asia reported

·         Better data namely PMI,

·         Monetary stimulus,

·         Corporate earnings beating expectations,

·         Lowering interest rates (in support for growth vs. Inflation).

And some of you probably know that the volatility index is at current at 20 thereabouts from readings as high as 45!

And what does the last two points encourage? That is, in an environment where interest rates are low and volatility is not high. It encourages carry trades.

If you’re not too familiar with the carry trade concept (please Google it, this point is VERY important). And the king of safe haven currencies is the Japanese Yen.

Did you notice what happen to the Japanese Yen and the US dollar lately? While most economists, fund houses are bewildered with the fact that the Japanese Yen is weakening against most major currencies (apart from the recent monetary stimulus), the obvious reason is; in a low volatility environment coupled with very low interest rates (for an extended period of time like the US until end of 2014) this encourages carry trade. That is borrowing from low yield assets and investing in higher yield assets like the Aussie, Kiwi, Loonie, commodities.  Similarly, high yield assets like stocks rise. Does this explain why the high yield assets (like commodity currencies) have strengthen? The Euro is NOT!

Hence, let’s get back to the subject matter of this post.

If you follow most, if not all of the above, you should follow closely to the volatility index, VIX! For e.g. One of the possible events that may cause the volatility index to rise/spike could be the events that are brewing in Europe; Greece and/or Portugal, etc. And when that happens, it is known as unwinding of carry trades. What happens thereafter is your imagination!

Finance ministers from all 17 euro-area countries meet in Brussels (Monday) as governments close in on a deal to unlock a 130 billion-euro aid package for Greece. Hence, my speculation is that volatility will be highly in suspense before the news!

News over the weekend - China cuts RRR by 50 basis point, effective Feb 24th, 2012 afterwhich a newsflash from Bloomberg on China. Japan to assist Europe solve the debt crisis thorugh the IMF. (Specifics are not out yet.)

And if some of you still don’t follow, please feel free to comment or ask questions. While the rest may understand the above, why not drop me a comment on the above analysis! And if you like the post,

·         (This had to be deleted) - apologies for the grave mistake on adverts.
·         forward the post to your friends 

·         Add (like) me, if you have not done so.

For the record, my posting since Jan 2012 had been very receptive with my last post, Investment planning, huh hitting ALL time record high page views. Thank you for visiting my blog for quality and timely posting.

Investment planning? Huh?

The above is all about planning with you.

Consideration for having an investment plan – In Singapore the Savings rate is currently 0.125% while inflation is at 5.5%. The problem will then be: erosion of purchasing power taking your wealth (if any) lower. If you agree, please read on.

Most people are afraid to lose money. The common reason is that they are so busy with their work/profession; they do not have time to monitor or understand markets. This would lead to losses during down market corrections or bear markets.

If you do not have time to monitor / understand markets, you have two choices;

• keep the money wherever it comes from and earn the (pathetic) interest/yield; is is definitely safe this way or
• seek referral for a trusted wealth planner (at a small professional fee); please read on.

Depending on your risk profile, time horizon and investment objectives, etc a strategy is drawn up for your approval (applying the Art of War principle).

Depending on my reading of financial markets coupled with on-going intermarket analysis, an on-going strategy is drawn up to accomplish your (realistic) investment objectives (goal) and a stretch goal.

A well defined client-planner relationship is established with well defined responsibilities of the client and the planner. While the client’s responsibility is to provide changes in personal profile and objectives, the planner’s duty is constant monitoring, updates (as in posting of my blogs) and pro-active ( & reactive) management of the client’s portfolio.

If all is fine, the strategy is drawn up with diversification and asset allocation specifications within the client’s risk profile and depending on the economy cycle. Communications are through emails and SMSs!

For the record, during the global financial crisis in 2008-2009, the Asset under Management does not exceed more than 6% of loss while some may even enjoy a 2% gain. As for Year 2011 the results are posted here.

As of current, the Asset Under Management had recuperated losses in year 2011 and depending on respective risk profiling; some are enjoying 2-10% of gain. (wow, isn't this fantastic; the secret (or no secret/no brainer) is discipline and startegies are defined to cut losses while preventing further erosion of your pricipal, hence a small lost is recuperated easily) It has been an extremely difficult fourteen (14) months. Fighting fire for 12 months and delivering some goals YTD.

I am exhausted! As the market will always be there the next business day, I will be taking a well defined break. Hence, whichever, the market will trend the following week, I will be taking a rest and be taking ALL the profit of the table. If you’re happy with your performance too, you may decide to move into bonds that provide regular income (dividends).

If you miss my post, don’t worry as I will still monitor the financial markets and continue blogging. Of course the major difference is that my responsibilities will be much lighter while enjoying a well defined break!

Happy Investing! By the way, the Greek situation may finally come to a close this weekend or probably (it is so common that datelines are postponed and postponed with the exception; planned riots do not get postponed) the can would be kick further again and again.