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Bearish or bullish? Listen to experts?

Sunday, November 27, 2011

Towards end of the year, often investors look forward to a run up in share prices. Some look forward to the Capricorn Effect which is expected to happen at the start of the new year. Could it happen again or would the mountain trekking herbivore do a disappearing act?

Personally, I am sticking to my plan of holding on to dividend generating investments and not adding unless compelling value is evident. I do not know if the bear is going to strengthen or if the bull would make a dramatic return. I definitely do not know when either scenario might happen.

There is quite a bit of pessimism and fear in the air, that we know. Whether we have hit extreme fear and pessimism, I am not so sure but people (including myself) are still looking forward to that big crash before we roll out our warchests. So, I suppose there is still some optimism and hope.

Conventional wisdom would say that when the last iota of hope has been crushed, we would see the market bottom. That would be when no one wants to talk about stocks anymore. Be savvy. Be brave. That would be when we pick up undervalued stocks with abandon although we might not talk about them. ;)

You might be interested in reading the following article for some expert opinions but I would say to anyone that it is important to have a plan in place and act upon it when the time comes. Do not get distracted by the news:

Article in CNA: Investors brace for bearish market.

"Sani Hamid, director of wealth management at Financial Alliance, said: "What I suspect is that this market still has a bit way to go to downside before it burns itself out, which is a point of capitulation whereby everybody is just really gloomy and bearish. When the situation reaches that point, I think that's when markets will bottom."

Mr Brice said: "Ultimately we believe that we will get that rebound and that quantitative easing in the US will happen in the first quarter of next year. And we believe eventually Europe will get its head around the problem and gradually move towards some sort of resolution. We do believe we will see progress there. In that environment we could see quite a significant risk rally."

Related post:
No change to my plan as I plan changes to my life.


financialray said...

When our money is already working hard enough for us, we listen to nobody, not even the so called experts.

For by then, there is no reason to be extremely greedy or extremely fearful.

If there is a big fish that swims along towards us, we catch.
If there is none, we happily peel our prawns(returns) to enjoy.

AK71 said...

Hi financialray,

I like this: bo hi hei ya ho. Hahaha... Thanks for sharing this. :-)

Ray said...

How would we know if the big fat fish that swims past us is a prey or is it a great whitish predator? :)

AK71 said...

Hi Ray,

I know for a fact that if it were a Great White, we wouldn't know what hit us! That is a good comparison too because a fierce flush downwards on high volume is characteristic of extreme panic in a bear market sell down.

financialray said...

Yes, it is true, especially in property investments.
Sometimes, what looks like a big fat fish may turn out to be a Great White in property investments.
So treading in such waters requires a lot of precautionary measures.
Knowing Great Whites exist in the seas however should not be the reason why we cannot swim in the sea.
More importantly, we need to be prepared to know if we can survive if bitten by a Great white. Why? Because we cannot be 100% sure we will never be bitten, esp if going up too many mountains we will spot a tiger.

Don't enter tiger's den, cannot catch tiger's cubs.
Don't enter the sea, cannot catch big fat fish.

AK71 said...

Hi financialray,

I rather like the idea of staying on a fishing trawler and just netting my fish. Hahaha... I am afraid of the Great Whites. ;p

Ray said...

yeah.... i agree.
I rather stay in a fishing boat.
I might miss out on the big fat preys but I know I would be relatively safer from being shark food.

I will make do with small fishes that swim near enough to my fishing boats or make do with little prawns.

Coz I cannot tahan a shark bite... :(

AK71 said...

Hi Ray,

Self-knowledge is priceless. :)

A snake that thinks it could swallow an elephant is not only delusional but suicidal. ;p

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