Wednesday, 6 January 2016

A brief market review


Read:
The Impact of the Likely U.S. Rate Hike on Asian Equity Markets

"Although QE tapering and rate hiking are two separate issues, the implication to the markets is similar, namely rising interest rates, tightening capital funding, capital outflow from emerging economies, and currency instability. All of these will have a much worse impact on economies with large current account deficits, high external borrowing relative to reserves, high inflation, and deterioration in economic fundamentals."

"That period of rate hiking had the worst effect on the U.S. bond market compared to the other two, during which the Fed took more measured paces. The impact was more pronounced on Asian equity markets than that of the U.S."

  • Although 2016 market has a gloomy start, but I think the turbulence is far from GFC and subprime unless *touchwood* some canon got triggered again. Fed's rates hike spells confidence in the US economies, Yuan's depreciation might boost export from China, oil prices benefit emerging Asian economies but hindered the stock growth.
  • Caution is to be exercised in commodities, bonds and cyclical stocks
  • As we can observe from previous crises, dip was fast but rebound was fast as well. It's a matter of how you buy into the dips those stocks that are fundamentally sound to benefit from the gains.
  • STI hasn't quite come to the big dip yet if you look at it over years long time frame (chart above). I would expect the conservative support to be at 2500 to 2600 range if investors continue on sell-down this year (for whatever reasons that I can't foresee).

From the last link: "The World Bank expects the global economy to grow around 3% next year, while the IMF thinks that the world’s economy could grow 3.1% this year and 3.6% the following year."

Even if it's the start of a 'roller coater dip', I would continue to fasten my seat belt, hold tight and just ride the course. #conviction #don't scream

Which point would STI consolidate at?

What's your take as an investor? Trend traders what do you see?

9 comments:

  1. Rainbow girl,

    Ahem. I putting my investment hat on now OK?

    3 pokes:

    1) Trend traders also trader leh. Make up your mind ;)

    2) How many long term investors you know use charts?

    3) Your trend line suka suka draw one. Like that also can?


    You har! Face-palm...


    ReplyDelete
    Replies
    1. Hi SMOL,
      I was waiting for your poke.

      1) Most traders follow trend. No?

      2) Long term investors, are you referring to those that don't care about point of entry and just buy at intervals?

      3) Yes my trendline is off, let me re-post again. Support trendline should be lower if I follow exactly the points. The view would be much more pessimistic...

      Delete
    2. I coined myself as a long term investor but I might be a trader and not know it. That's why I care about charts. Drink coke zero and think it's coke original. Geez

      (If my trendline still wrong then please put your trader hat on and shade some lights on me. TIA)

      Delete
    3. Rainbow,

      1) That's better. It's OK, even CW made mistake with his recent chart and Rolf pointed out to him. There are people who "Trust But Verify" ;)


      2) If you are a trader, did you take some money off the table when STI was nearing the resistance at 3500? A trader is a buyer AND a seller ;)


      3) You already have an anchoring bias of STI 2500. I don't know how it got implanted into your mind, but that's the biggest no no in chart reading.

      You don't manipulate charts to conform to your pre-conceived ideas.

      Just observe what the chart is telling you without distortions from your biases.

      Of course that's hard! If easy everyone would be millionaires using charts ;)

      By the way, were you vested when STI broke below 2000 during 2008?

      I suspect you did not. If you did, you won't be saying about seat belt, holding tight that sort of thing...



      Delete
    4. Hi SMOL,
      Nope, started out only in 2010 (read About Me).
      Hmm... so shld investors also identify at what point of break-below support to cut loss and not hold tight anymore? I was thinking as long as we are holding non-leverage positions, can always count on the rebound.

      Actually hybrid is such not a bad idea. :P

      Delete
    5. Just as long you don't mix up investing and trading.

      The most common mistake or excuse is to let a losing trade turn into a long term investment.

      So before putting on a position, write down your investing thesis or trading plan - I'm not a big fan of putting it on-line.

      Keep it private. And see how often you lie to yourself.

      Over time, you'll know whether you're an investor, trader, or hybrid :)

      Say no count. Based on track record shouts louder than any manifesto :)

      Delete
    6. I didn't answer some of your questions as they have to be answered by you through the baptism of your own real life trading/investing experience.

      If you have never tasted water melon, no matter how I eloquently describe the taste to you, its not the same.

      Delete
    7. Thanks SMOL for drinking kopi with me. :)

      That's why now I am foot in, partially submerged and waiting for the roller coaster to be done with the down tracks.
      Looking back at history, I failed at trading mode. Now experimenting hybrid mode.

      Delete
    8. answer to your part 1 point 2: Looking at charts proved to be good for long term investors too. *Point to Uncle8888 and his victories*

      Delete

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