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The mother of them all!
2 June 2009 (more...)
Chart source: Bloomberg
Since my previous article on 6th May, KLCI has added 39.66 points to date, that’s 3.9% up in about a month, not bad. But if you invested in counters like KNM for example, you would have been 40% up in the same period, very good indeed.
I’m optimistic in the short run. Let’s put things into context, investors have been super scared since Lehman Brothers collapsed in September 2008, then there was some rebound and they got super scared again in March 09. During this period, many fund managers I know have been holding cash, US treasury specifically even though they earn almost nothing for this - safety first!
The problem is nobody can keep cash forever and not generating any returns. Fund managers need to put money into work, that’s their reason to exist. So any hint of good news is very welcomed after many many months living in fear. These days they are talking about ‘green shoot’ – sign of economic recovery. Whether there are already green shoots out there, I’m not sure, maybe yes, maybe no, time will tell.
One thing for sure is that when investors are scared, they are super scared. When they are bullish, they are over bullish. Hence the current strong market rally. In the previous article I mentioned about the mother of all market rallies following the mother of all recessions.
After saying that I forgot one thing, this is the mother of all rallies. So the market rebound will be super strong than usual. That’s why we are seeing the continuous rally. Those fund managers need to put money to work.
What happens to the global economic recession? Everyone was so scared just a few months back. Are we ok now? Unfortunately the economic trouble is still there, may be conditions have improved somewhat. This is market over reaction as usual, there will be correction.
How do I make money then? I think there is still a possibility to make money in the current market. I expect the rally will continue a bit more before correction comes. So if you are planning to buy, set your cut loss limit and be disciplined. If the stock has gone down and reach your cut loss limit, then sell! Who knows the next correction could be the mother of corrections, you really don’t want to get stuck then. Happy investing my fellow investors!
Comments
Palm oil price will weaken in
Palm oil price will weaken in the second half of the year, so I would expect palm oil companies share price will reflect this. Take this opportunity to accumulate those shares - over the medium term they'll outperform KLCI.
Also I think blue chip counters won't move that much. The focus will be on penny stock now. So if your risk appetite is there check out those penny counters, BUT this is for short term and not for long term holding. Be careful though, set your cut loss limit if things don't go to plan, and be discipline about it.
Any recommendation which
Any recommendation which sector to buy or to avoid?
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