by HengHeng » Sun May 25, 2008 12:00 am
Well feel free to post your thoughts here as well. I think we can all learn from each other. My initial intentions was to just use this as a corner to share views and thoughts. It is simply too messy with all those new topics.
Too messy to my comfort.
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For those that do not know what is going on. My suggestion is keep cash at this present moment. Do some liquidation of the stocks in which you do not intend to hold for various reasons like slowing growth potential , skrinking profit margins.
For those with cash and has intentions of having a buying spree , my suggestion is probably it is too late. Lelong might have passed us , we might see another round of consolidation. I'm not sure when it would be but signals from various sources are pointing to an inevitable correction.
1. Fed's signal of their hand off the financial markets.
2. Short term loans used to stablize the market is maturing (100 days)
3. Most financial instituitions mainly investment banks have not declared their actual sub prime losses meaning it is still a running number. From the financial statements of some instituitions in which i have read , many actually offered writedowns and not writeoffs , it is merely pushing the "losses" to a later time instead of actual realisation now.
4. As olympics draws near , many factors will come in mind. The white elephants created will eat into china GDP , the ecological problems which will arise from china's rapid growth strategy and the flaw equity markets in china. With all these potential catalyst waiting for reasons to push market down , i'm pretty skeptical about the global economy at least for the moment.
5. With US still in pain , it is a matter of time where this pain would spread to europe and asia. My gut feeling tells me that it might just stable down towards next year with us seeing a sharp drop probably this year with fear lurking around the corner.
My other thoughts :
I borrow some perspective i learn from Soros's books. The feedback loop or Reflexivity teachs us the boom and bust occurs only when market prices affect the so called fundamentals but there are times where the Market's perspective differ from the underlying reality.
There are times where other factors like fear and propraganda moves the markets. For instance G.S called for oil prices to hit 200 in 2 years and oil prices push like crazy. But it is not like US economy is going crash the next week but how come prices move so fast ?
The US economy is not neccessary is a good shape why is there a recovery of 15% from a close 30% drop in Dow Jones. How can this happen ? To me those post the best chances to for entries to trades. Of course formulating your own strategy to gain from this prespective is everyone's job. It is different for how people percieve what is going to happen. My opinions might differ from yours. Thats how trading works.
Beh Ki Jiu Lou , Beh lou Jiu Ki lor < Newton's law of gravity , but what don't might not come back
In the game of poker , "if you've been in the game 30mins and you don't know who the patsy is, you are the patsy