WARNING!! Is The 2nd Tsunami Wave Here Or Is This Just A Normal Correction?
The 1st Tsunami wave in the stock market happened in 2008. Prior to that, bubbles were observed in February 2007(Singapore stocks dropped by 11.6% because of the 15% decline in China market) and July 2007(further 19.7% slide when MM Lee warned us about the U.S. sub-prime problems and government’s anti-speculative measures to cool the red-hot property market). The final bubble burst in October 2007 and that signalled the start of the 62% decline in STI!!
Since March 2009, we have seen a tremendous bull run, driven more by stimulus plans and bailouts from central governments around the whole world, rather than a solid recovery in the real economy. This year 2010 alone, we have just seen a 9.6% correction in January and till to date a 8.6% decline in STI in 3weeks. I believe the damage has been done, we MAY have just seen the start of the 2nd wave of Tsunami or very strong signals that we are not too far away from it. Several reasons:
1) PIIGS(Portugal, Ireland, Italy, Greece and Spain) debts crisis,
2) U.S. total funded and unfunded debt amounting to about US$130 TRILLION, it may go into double dip recession in 2011
3) China economy maybe over-heating and possible property bubble there
4) Goldman Sach criminal fraud charges imposed by SEC
5) Dramatic increase in Option Adjustable Rate Mortgage(OARM), Agency and Alt-A Monthly Mortgage Resets in U.S. 2nd wave of mortgage resets are around the corner and they are peaking in 2011, thus causing more foreclosures in U.S.
6) Terrorism (a major terrorist activity occur around once every 8-9 years, based on the book “The Great Depression Ahead” by Harry S. Dent, Jr. The last major terrorist attack was on 11 September, 2001.
Fundamentally, Singapore is well prepared for this financial crisis :
1) Opening of 2 Integrated Resorts (IR)
2) Youth Olympic will be held on 14 – 26 August this year
3) Possibility of General Election happening in 2010 (based on history, Singapore stock market has normally performed well prior to the election)
But we have to understand that Singapore is just a little red dot which relies very much on export, we will be badly hit if huge economies like U.S., Europe, Japan, China…etc were to run into crisis again, like what had happened in 2007 and 2008.
Personally, I believe we MAY have just seen the start of the 2nd wave of Tsunami or very strong signals that we are not too far away from it, rather than just any normal correction. I am not saying that the stock market is going to straightaway collapse from here, it may rally along the way and people should be selling into rallies, rather than buying aggressively into the market. If the market slides further, it will be a good time to start doing short-selling to ride the downtrend. Precious metals, like gold and silver are also good instruments for us to protect our wealth and hedge against inflation, which is slowly showing its ugly face.
Above is just my personal view and I have to admit that I may be wrong! I would rather be cautious and defensive now than to be an aggressive buyer into the market. The downside risk is much much higher than the upside potential at this point of the time. Please be careful!
Disclaimer: Please be informed that the above mentioned stocks/indexes/investment instruments are solely for the purpose of education; it is NOT a recommendation or an invitation to trade/invest. For trading/investment advice, please speak to your remisier, dealer representative or financial adviser. Please understand that there is risk in every trade/investment venture, know your risk first before you venture into any of them.
Jim Rogers: U.S. Government Spending Is Like Tiger Woods Dating
Jim Rogers, chairman of Jim Rogers Holdings, shared on CNBC on a wide range of issues ranging from the FED chairman Ben Bernanke, Timothy Geithner, gold, silver, copper, commodities, agriculture, U.S. dollar, Yen, Swiss Franc ..etc. Jim Rogers for the first time says that he is temporary bullish on the U.S. dollar because there might be a rally soon. He confirmed that he is not buying nor selling any gold at this point but he might buy some more if the gold goes back again to US$1000/ounce. Jim Rogers does not see any bubble in the gold at this stage because he says most investors still never owned any gold…. He also mentioned that he prefers silver and palladium to gold because silver is still 70% below its all time high. Jim Rogers is as usual still very bullish on agricultural products and commodities.
Source: CNBC
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