Tuesday, August 9, 2011

Stockmarket - Anomaly or Normalcy

What goes up must come down as what goes down will come up... its just when

When US raised their debt ceiling, market caught a chill

- If US debt negotiation remained in deadlock, the reaction will be worse. The fact is US will, and have, approved the creation of more 'monies' (fiat money is the opposite of honest money) for continued survival.

When S&P downgraded US debts, market went virally down

- S&P downgrading of US debts is only normal as the quality of debts have decline with more 'fiat money' (currency that a Government declared as legal tender, not necessarily backed by gold or reserves)!

The writings were on the wall for some time and when reality strikes, adverse reactions occur. Its simply 'buy' on rumour and 'sell' on facts.

Hot monies will move into rising and/or appreciating currencies and by extension, their stock/capital markets and Asia and other emerging economies will be the main beneficiaries.

There will be a flight to quality.

In the short to medium term, there is no 'safe haven' currency. The stronger currencies are not back by gold nor growth; its back by a sense of security - its the strength of the bullet that walk the talks! What else, love it or hate it, but US$. People fear changes.

The volatility of the stockmarket augurs well for traders. As for long term investors, its a time to 'buy cheap'; what happened to US has been waiting to happen for some time.

Everyone wants to make money but few wants to do homework.

The capital markets are not casinos and you need to do homework and be prepared. If you are rushing in and out like everyone at rush hours, chances are you are neither bullish nor bearish. You are a plain sheep waiting to be slaughtered.

How do you reconcile the argument that when commodities prices decline, recession is imminent as rising commodities is inflationary?

These terms are coined to keep research analysts right, either side of a coin; got it?

Did the dramatic fall in the markets come early? Cyclically, it is not totally unexpected. The reaction in stockmarkets is a reflection of mass psychology - 'the herd instinct'. You better be the shepherd than the sheep

The underlying problems - US debts, Euro bankruptcies, Mid-East spring uprising - will take time and political will to clear; in the meanwhile, hot monies will slug it out in the capital markets.

Trade at your own risks 危机 - there are opportunities in the eye of danger!

If you cannot take the heat, leave the kitchen. Do not gamble for the stockmarkets are not casinos...


Zhihua said...

Hi, Brother! I learned a lot from your institute. I would follow your article.

wizard said...

Thank you. I hope to inspire and also to listen to all/others feedback and opinions

Anonymous said...

When the commodities are coing down, it indicates that the world is entering a downward trend. With hot money inflows, is it going to counter this down trend?

wizard said...

When commodities prices are falling its an early sign of economic weakness.. demand for basics (factors of production) are trickling off.
With unemployment and underemployment, NO economy can continue expansion as the real economy hollow out.
Watch the event unfold..with care