My articles on political uncertainty last month have certainly struck a note. A coup in Thailand, 3 weeks worth of street protest in Taiwan. September is indeed a cursed month for many markets throughout history.
The Day the Dow recovered
After 6 long years, the dow jones index has at last recovered from the peak of the worst market crash in the history of mankind during year 2000. Although many analysts discounted this event as the Dow is only represented by 30 of US largest stocks and most of the other indices in the world are still below the recovering line, I see this as a significant psychological triumph of investors
The Biggest Companies in the World
The Dow Jones are made up of some of the largest companies in the world like Coca-Cola and P&G. The capitalization of a single stock are bigger than some of the smaller countries in the world. Their operation spans across all continents and I would say, is a pretty good indication of the economies of the world. Breaking the previous highs in 2006 indicates that we have probably reached a point where the economy is on a much stronger footing than we have previously thought. These companies are the leaders of the corporate world and the result of their profitabilities will slowly spill into smaller companies and emerging markets and eventually, pushing the prices of smaller companies upwards.
The Others will Follow SuitGiven the interlocking of today's markets, I will not be surprised to see that the prices of emerging markets and smaller companies will follow the way of the Dow. Even if they do not reach their previous highs (Not so possible for overinflated technological stocks), the breakthrough indicates that there may still be room for the market to continue to run, making this one of the potentially longest bull run in the history.
The Dark Side of the Story
The story is not all glow and glory. US Housing prices are declining gradually from their highs, companies are receiving less orders for their goods. The US economy is slowing down. Economics academics are warming to the idea that another recession is near... Again. The key to the continual growth of the stock market will now depends whether the Americans can achieve slow consistent growth with low inflation. This is a delicate balancing act and most economies in the world usually lose their foots and fall.
So what is the strategy should we adopt? We should be approaching the market with a spirit of good optimism with a dash of skeptism. React accordingly. We do not want to miss the upwards run, and neither will we want to be caught in the downside plunge of a recession. Venture forward bravely but always on a lookout for that runaway bear.
And of course, we will be there to look out for that bear for you.
The Day the Dow recovered
After 6 long years, the dow jones index has at last recovered from the peak of the worst market crash in the history of mankind during year 2000. Although many analysts discounted this event as the Dow is only represented by 30 of US largest stocks and most of the other indices in the world are still below the recovering line, I see this as a significant psychological triumph of investors
The Biggest Companies in the World
The Dow Jones are made up of some of the largest companies in the world like Coca-Cola and P&G. The capitalization of a single stock are bigger than some of the smaller countries in the world. Their operation spans across all continents and I would say, is a pretty good indication of the economies of the world. Breaking the previous highs in 2006 indicates that we have probably reached a point where the economy is on a much stronger footing than we have previously thought. These companies are the leaders of the corporate world and the result of their profitabilities will slowly spill into smaller companies and emerging markets and eventually, pushing the prices of smaller companies upwards.
The Others will Follow SuitGiven the interlocking of today's markets, I will not be surprised to see that the prices of emerging markets and smaller companies will follow the way of the Dow. Even if they do not reach their previous highs (Not so possible for overinflated technological stocks), the breakthrough indicates that there may still be room for the market to continue to run, making this one of the potentially longest bull run in the history.
The Dark Side of the Story
The story is not all glow and glory. US Housing prices are declining gradually from their highs, companies are receiving less orders for their goods. The US economy is slowing down. Economics academics are warming to the idea that another recession is near... Again. The key to the continual growth of the stock market will now depends whether the Americans can achieve slow consistent growth with low inflation. This is a delicate balancing act and most economies in the world usually lose their foots and fall.
So what is the strategy should we adopt? We should be approaching the market with a spirit of good optimism with a dash of skeptism. React accordingly. We do not want to miss the upwards run, and neither will we want to be caught in the downside plunge of a recession. Venture forward bravely but always on a lookout for that runaway bear.
And of course, we will be there to look out for that bear for you.
No comments:
Post a Comment