Market News
Posted On Wednesday, January 23, 2008 at at 10:22 AM by Finance AnalysisBear Market or just Correction?
Yesterday, the US Federal Reserve slashed its key federal funds short-term interest rate by three quarters of a percentage point to 3.50 percent Tuesday amid sharp falls on global stock markets. Therefore, the stock market is expected to recover some points and maybe drop back to its deepest valley just like before. Personally I feel that the fed rate is only a temporary fix and the ultimate problem is not fixed.
In South East Asia, the Indonesian rupiah rose sharply, past the 9,400-per-dollar level on today, after a Federal Reserve interest rate cut boosted appetite for risky assets. The rupiah rose as high as 9,390, up 1.1 percent from late Asian trade on Tuesday. It was said that the rupiah follows regional currencies as well as the other emerging currencies. The Fed rate cut sent positive sentiment.
Analysts had anticipate that Thai stocks will recover on after plunging to their lowest in more than seven months as panicky investors fled the market fearing a U.S. recession could wreck the global economy. Foreign investors sold a net 4.86 billion baht ($146.6 million) of Thai shares, raising their net selling to 34.97 billion baht since the start of this year. Fund managers say foreigners are selling in Thailand to cover losses elsewhere.
By chance, I was reading a blog by Tan Kin Lian. He mentioned that we are in a severe bear market. I too agree with him. If I’m one of the funds manager, I believed I will do the same. Being a good fund manager, I would want to earn or minimize losses in the market. What would I do? I sell in large volumes, causing people to panic and sell. Thereafter, I buy in a cheaper price. Fact? It is up to you to decide.
Tan Kin Lian Comments
“We are now in a severe bear market. The stockmarket around the world has dropped more than 20% from its recent peak. The drop can be 5% a day. It can drop a few days in a row.
This is the work of hedge funds. When the market is weak, they sell in large volumes, causing weak holders to panic and sell their holdings. There are no buyers, so the drop is severe. Later, the hedge funds will bear back their short positions at the depressed prices and make a profit. It has happened on many occasions in past years, during bear markets.
Long term investors should not worry. This short term massive selling last a few days and will stabilise or recover. In fact, this is a good opportunity to buy stocks at extremely depressed prices.”
Yesterday, the US Federal Reserve slashed its key federal funds short-term interest rate by three quarters of a percentage point to 3.50 percent Tuesday amid sharp falls on global stock markets. Therefore, the stock market is expected to recover some points and maybe drop back to its deepest valley just like before. Personally I feel that the fed rate is only a temporary fix and the ultimate problem is not fixed.
In South East Asia, the Indonesian rupiah rose sharply, past the 9,400-per-dollar level on today, after a Federal Reserve interest rate cut boosted appetite for risky assets. The rupiah rose as high as 9,390, up 1.1 percent from late Asian trade on Tuesday. It was said that the rupiah follows regional currencies as well as the other emerging currencies. The Fed rate cut sent positive sentiment.
Analysts had anticipate that Thai stocks will recover on after plunging to their lowest in more than seven months as panicky investors fled the market fearing a U.S. recession could wreck the global economy. Foreign investors sold a net 4.86 billion baht ($146.6 million) of Thai shares, raising their net selling to 34.97 billion baht since the start of this year. Fund managers say foreigners are selling in Thailand to cover losses elsewhere.
By chance, I was reading a blog by Tan Kin Lian. He mentioned that we are in a severe bear market. I too agree with him. If I’m one of the funds manager, I believed I will do the same. Being a good fund manager, I would want to earn or minimize losses in the market. What would I do? I sell in large volumes, causing people to panic and sell. Thereafter, I buy in a cheaper price. Fact? It is up to you to decide.
Tan Kin Lian Comments
“We are now in a severe bear market. The stockmarket around the world has dropped more than 20% from its recent peak. The drop can be 5% a day. It can drop a few days in a row.
This is the work of hedge funds. When the market is weak, they sell in large volumes, causing weak holders to panic and sell their holdings. There are no buyers, so the drop is severe. Later, the hedge funds will bear back their short positions at the depressed prices and make a profit. It has happened on many occasions in past years, during bear markets.
Long term investors should not worry. This short term massive selling last a few days and will stabilise or recover. In fact, this is a good opportunity to buy stocks at extremely depressed prices.”
