Sunday, 19 February 2017

How Real is the Trump-driven Stock Market Bull’s Run lately?

I had been away from the stock market for several months now and then I realized that there had been a bull run lately. Dow crossing 20k and STI crossing 3k.

Wow... Great according to what Trump tweeted and many reckon he is going to transform the US economy for the better.

You really think so?

I remember in several months ago when Trump was the candidate, he mentioned we are in a day huge bubble that will burst anytime, and even worse if Fed is going to increase interest rate!

Now he is the president and when Dow crossed 20k, he tweeted great! And all credit to him. Suddenly all the problems had been resolved just like that!

Hmmmm....

Do we really think how things can change within such a short time.

It is pretty obvious to me that things are pretty much the same if not worse, now as compare to few months ago. Words can change within this short time, but fundamentals don't!

The economy is not as vibrant as the stock market think.

It really pays to be prudent.

Patience and self-control is the key for me. For many months now, I had do nothing in the stock market after cashing out!

I am so happy that I have crafted the patience which I will never going to have in the past, always wanting to dabble here and there to the buy/sell buttons of the stock counters.

Sometimes stock increase, you are so pleased about your own talent. Sometimes stock price drop immediately after your buy button, we call it itchy fingers or bad luck!

I am convicted that we are heading into a dangerous zone now. The more the market celebrates, the more so we should worry!

Maybe ask the question if the majority is always correct or wrong?

Trump is protecting US economy by making it more enclosed. Short term you protect jobs, but long term prices in US going to be more expensive and make them less competitive to the rest of the world. Then he still need to fulfill his promise to build the wall and the many infrastructures in US.

It is funny that everyone is cheering that economy in US is improving and interest rate is going to be raised by Yellen, without seeing more in depth the complete picture.

Over time, price of goods and services in US will increase due to protectionism against the China and the rest of the world. Then US will also spend more in all the roads constructions! Next, interest rates is going to be raised, meaning mortgage and loans are going to be more expensive.

So everything will be more expensive!

Then shall we asked where will be the money coming from?

Yes, you guess right - print more!

For me, I shall do nothing now.

Keeping my cash in the bank earning meagre interest and hoarding precious metals when prices is right will let me sleep better at night! And I am also happy that my career for now is less affected and starting to see more certainty!

Meanwhile I suppose patience and self-control is critical now for me which I am happy to be able to enjoy these two fruits lately. Then wisdom and knowledge will tell me when the time is ripe and where to deploy the hoarded cash and metals.

The journey has just truly begun I suppose!

To end this article, may all the readers and participants of the stock market be blessed with the wisdom and the prudence in dealing with the market so that you can be prosperous and have good success!





11 comments:

  1. Hi Rolf,

    I have been following your site and read that you are in the OG sector.

    Noticing that the oil price has stabilied at $50 plus.

    Regarding shale gas, is this a disruptive thing or it has been with us for many centuries?

    Or maybe its the technology that is disruptive.

    Can keppel or sembcorp build these technologies to ride the shale wave?

    ReplyDelete
    Replies
    1. Hi sgdiv,

      Tks for following this site. Not sure if shale gas is following us for centuries but sure that new technologies always surface.

      Keppel and sembcorp in O&M are primarily builders of rigs, production units and vessels, hence it is totally different businesses as the shale gas.

      Normally, in business, you have to build on your core competencies and not say overnight you just change your competency bcos market change.

      Therefore, it will take sometime before both Kep and semb are evolving into new business line other than vessels building.

      They are diversifying away from being builders as we can already seen!

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  2. Hi,

    You are currently using top down approach and I kinda agree that your observation on world economy is not as vibrant as the market. But somehow, the correlation with GDP growth and market performance is not strong. I understand that you are taking a prudent approach but this may mean that you are missing out on potential rallies and portfolio income.

    I am trying a bottom up approach but currently heavier on cash. In my own opinion, to get out of stock totally due to the forecast of economy could be a bit extreme. However, time will tell whether you are right :)

    ReplyDelete
    Replies
    1. Hi Bf,

      Thanks for the comments.
      Agree on the weak correlation of GDP growth and mkt performance.

      It's always easier to win small here and there when market is turning vibrant. But it is never easy to be quick enough to avoid a sharp downturn.

      I prefer to miss out the rallies and portfolio which is generally more difficult than to win small on the rallies here and there and to follow the majority.

      Just speaking base on some past and life experiences that helped in my investment decision.

      Just a personal opinion that the big picture in life is more important, similarly in investment and all other decisions in life.


      Delete
  3. Thanks for the article. To be honest, I don’t really believe that Trump can significantly improve lives of Americans into the better. As every politician, he talks too much and promise many things. However, it’s hard to notice any positive changes into the better. Moreover, every step and decision he makes is quite doubtful and widely discussed in the world and mass media. I’m afraid that he is more a business man than a politician. He has so much money and doesn’t need cash loan services to so he became a President because he wants more power.

    ReplyDelete
    Replies
    1. Hi Camilla,

      Thanks for the comments. Considering the weak and strange fundamentals of the world situation now, i am less focus on the financial and political situation now.

      All my attention is on family and friends' relationships which is more wonderful. :-)

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  5. Not sure why but I have the impression that the worst environment to be in is over for Singapore. Low rate,property curb easing, STI 3.2k compared to historic is not in bubble, oil stabalized, Trex saga over, forest burning curtailed, salary cost slowed, S$ weakened ...

    ReplyDelete
    Replies
    1. Hi Cory,

      Maybe you are right, i do not know. All i know is i am more happy lately focusing on having an enriching and truthful life than to focus on the details of the world!

      I reckon my patience had been more matured.

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