Monday, August 17, 2009
10:18 am - Market Report by Bill Wermine
Dear Traders,
Bob Farrell was chief market strategest for Merrill Lynch from 1967- 1992. He had 10 rules for investing. Rules 4 and 5 apply today with most world markets and to a lesser extent the KLSE.
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
This is Farrell's way of saying that a popular sector can stay hot for a long while, but will fall hard when a correction comes. Chinese stocks have had a 100 % rally and last week a 12 % drop. The investors who came late to this party have been sorry.
5. The public buys the most at the top and the least at the bottom.
Those KLSE shares that have had the biggest runs will have the biggest falls.
Suggest moving your risks up to protect profits on all your shares and be ready to buy back once should you get taken out once
the correction runs its course. Be happy with a profit but do not expect to get the top.
A big drop in the China markets could trigger the correction.
Mark Mobius, chairman of Templeton asset mgt warned of a 30 % correction in Asian stocks as companies take advantage of the rally to sell more shares. Perhaps that is why Maxis is being relisted ? Sell at the high. That is what a good businessman does.
The AUD looks well supported as Bank of Australia is signaling higher interest rates to hold back inflation. 3 Month
T Bill futures in Australia tumbled to the 96, to yield 4 % far above the RBA 3 % target rate.
The IMF on the eve of the 2 year anaversary of the banking crises calculated that the cost of rescuing the system is close to 12 trillion USD- 10.2 trillion is from the US, Europe and the UK. Only 1.8 trillion is from the rest of the world including India, Asian countries.
That is why the IMF said Asia may decouple from the Western countries and lead the recovery.
In any case wait for a good drop in the market before venturing.
Have a good week
Bill
Bob Farrell was chief market strategest for Merrill Lynch from 1967- 1992. He had 10 rules for investing. Rules 4 and 5 apply today with most world markets and to a lesser extent the KLSE.
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
This is Farrell's way of saying that a popular sector can stay hot for a long while, but will fall hard when a correction comes. Chinese stocks have had a 100 % rally and last week a 12 % drop. The investors who came late to this party have been sorry.
5. The public buys the most at the top and the least at the bottom.
Those KLSE shares that have had the biggest runs will have the biggest falls.
Suggest moving your risks up to protect profits on all your shares and be ready to buy back once should you get taken out once
the correction runs its course. Be happy with a profit but do not expect to get the top.
A big drop in the China markets could trigger the correction.
Mark Mobius, chairman of Templeton asset mgt warned of a 30 % correction in Asian stocks as companies take advantage of the rally to sell more shares. Perhaps that is why Maxis is being relisted ? Sell at the high. That is what a good businessman does.
The AUD looks well supported as Bank of Australia is signaling higher interest rates to hold back inflation. 3 Month
T Bill futures in Australia tumbled to the 96, to yield 4 % far above the RBA 3 % target rate.
The IMF on the eve of the 2 year anaversary of the banking crises calculated that the cost of rescuing the system is close to 12 trillion USD- 10.2 trillion is from the US, Europe and the UK. Only 1.8 trillion is from the rest of the world including India, Asian countries.
That is why the IMF said Asia may decouple from the Western countries and lead the recovery.
In any case wait for a good drop in the market before venturing.
Have a good week
Bill
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