Reason of Correction

Many of my friends make a lot of "horizontal-wealth" through investment during 1st half of 2009. However, starting middle of June 09, share market around the world turns ugly.

Why?
Profit taking?
Corrections?
Or, continuing of bear market?

Let's do some analysis over here:

1. Like I said before, US funds accounted more than 50% of global market investment.
2. Economists foreseen that USD will weaken in the immediate future.
3. And, June is window-dressing month for fund managers.

If you relate these 3 assumptions together, the secret had unfold.

Explanations:

• From March 09 onwards, US funds have been flowing out of US to other countries. Emerging Markets rally. USD weaken.
• When mid-year reporting seasons approaching, fund managers lock-in their profit, pull their funds back to US. Emerging Market correct. USD strengthen.

Make sense?

Back to 90's Asia Bull Rally?

Still remember 93-94 Asia market bull run?

What is actually causing the bull run during that "sweet" time is happening soon (1-2 years).

Main factor: Weakening USD

During that time, because of weakening USD, funds being flowing to other market instead of US. And, Emerging Market - especially Asia - being the top spot for foreign funds to invest in. Malaysia, by that time didn't left out from the opportunity, and changing the lifestyle of many Malaysians (from ordinary person to Stock Traders).

This time around, many economists predict that USD will weaken because of the massive budget deficit recorded, high unemployment rate and weak economy's figures. What's the big deal?

Do remember that US funds reaches as high as 50% of world's share market. See it now?

For sure, US funds will flow from US to Emerging Markets (to get out from holding US currency).

Then, which asset classes they may went in? Fixed Income or Equity? It is very much depends on the risk appetite of investors. But, from the current scenario (June09), investors are most likely to move out from being conservative to aggressive mode. For that reason, Emerging Asia is the region where investors could not afford to miss out. More capitalised market like China, Hong Kong, and Singapore will most likely to benefit from these in-flow of funds.

Which sector/type of companies being recommended by you???

Battle of Bankruptcies???

Battle of Bankruptcies???

General Motors (GM) VS Lehman Brothers (LB)

If we analyze corporate bankruptcies occurred in U.S, we could found a huge differences in-terms of market reaction. Lehman Brothers bankruptcy last year had caused the market slump to all-time lows around the globe.

However, General Motors story didn't have any impact on the market either. Instead, market gone up "crazily". In fact, GM's demise had broken the U.S history -- largest corporate failure.

Why such differences? Let's have a look:

1. Expectation. LB caught everyone surprise when U.S government didn't lend a hand to rescue it, although LB is much more popular than Fannie & Freddie. In contrast, GM should have closed down long time ago, if not because of U.S government stubbornness to revive the company. Finally, "Paper cannot used to cover Fire". GM's case is expected.
2. Factor. Before GM announcing the final decision on whether it will survive or demise, market had actually factoring the possible worst outcome ways before GM's due date.
3. Relief. Market's arrow points to the sky instead of ground, because of the credibility of U.S government measures to revive the economy. Sometimes, facing the truth is the best solution for moving ahead. Peoples are relief that, after so many months of speculating, GM finally closed down.

What should I said further?

Good Luck...

Choosing the Right Investment Tactic

2008 share market around the globe had fallen 30-80%. Lately, market can't wait anymore, and had started to point the opposite direction instead. Given the vast investment opportunities, which are the best options for you to choose from?

First of all, investors must know the first-mover in-case market rebound. First-mover here refer to those companies which benefit when economy recovered. Blue-chips stocks are what you should focusing on because of the following reasons:

1. High Liquidity, where foreign or institutional investors can buy or sell their shares easily, without controlling too much of the share price.
2. Good Reputation, like Genting and IOI, are well-known in the market, which always fall into the radar of investors globally.
3. Industry's Icon, like Sime Darby which is an iconic company of Plantation sector. Should plantation sector revive, you can't deny it.

Secondly, choosing the right sector.

Some will come first, some will come second, and some will come last.

Sometimes it's hard to identify the prefer sector to invest. Choosing the wrong sector could jeopardise your investment return given a certain time-frame.

So, select carefully.

Hints: Which sector will benefit most from a series of measures taken by Central Banks and Government?

Rules for Investing in the Next Bull Market

Recently, i came across an interesting article titled above.
And, i totally agree with what was written. Here, I would like to high-light to you these "profit-able" rules (if you believe...)

1. Go Global
Most investors prefer to stick to their "home" market. It's a mistake. Are you sure your country will gave you the best return? So, spread your bets across the board.

2. Avoid big moves
You probably won't catch the bottom or peak. Then, what's the rush? Why buy or sell heavily in one shot?

3. Remember the market is just "us"
Shares rose when everyone was buying, fell when they were selling. And when everyone is trying to predict the market, they are chasing themselves through a hall of mirrors.

4. Don't get fooled by the wrong tense
People (even economists) tends to say: "these shares have risen", "these shares are rising", "these shares will rise". Past...Present...Future tenses. Do not get suckered.

5. Pay no attention to TINA
Sooner or later someone will urge you to buy shares, even at very high prices, because There Is No Alternative. Especially at the peak of the market. There are always alternatives -- like holding cash.


6. Be truly diversified
Here means investing across a spread of different asset classes and strategies. Not, "large cap value" and "mid cap blend". Think carefully, it's Asset Classes and Strategies.


7. Treat forecasts with a grain of salt
Economists and analysts always found the reasons and predict the market direction, even if their views are wrong. So, do not take their forecasts the only source of information.


8. Never invest in what you don't understand


9. Ignore what everyone else is doing
It's natural to want to "join the crowd" and avoid being "left behind". When it comes to investing, do what's right for you.


10. Be patient
Do not rush into or out of the market. But, it doesn't mean patient enough to miss all the opportunities (see rule 11).


11. Don't sit on the sidelines completely until it's too late.
If you are afraid to invest, do it early, little, and often.