19 October 2009

Are there any more Upside?

Right after the worst bear-run of the century, 2009 seems to be one of the best year in history of Stock Market. Although unexpected, the bull rally almost unstoppable yet.

Will it last? Or, when would it last?

W, V or L shape recovery is a hot topic among investment community. Anyway, all of this is depending on the basic fundamentals of the economies.

  1. the current bull-run is started just because of the low-base effect in terms of pricing. When stock prices are so low after 2008, many people became Warren Buffet - with no fundamental checks. They bought because of the stock prices only. And, they make some profit though. Not a bad investment, if they are lucky as far as I concerned.
  2. after the first phase of recovery, the second phase is earning potential. This is the phase where we must go back to the fundamentals of a company. Earnings growth is what will drive the share prices higher after the first phase.

This is why share market traded range-bound now (Oct 09). What would excite the Bull to run again is earning growth. Public Bank and glove companies are the main drivers of KLCI last week with positive earning growths. However, any setbacks will pull us down as what we saw in US, where Bank of America and General Electrics reporting disappointed results.

Conclusion: Do not look at the price from now onwards. Instead, look at the earning power of your favourite counters. Yes, there is further upside with earning as its ingredients.

Do share your stock recommendations, which you think have good potential here.

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