Danielle Park:Stay Defensive these few months
Drizzt Says:
Danielle Park is a manager that i admired alot and i always tune in to her for rational analysis of the markets. Her partner and spouse is a technician so they provide a very good combination of macro fundamental and technical view of things.
She notes that the fundamentals remain weak for a sustainable bull run
One of the silliest things I have heard lately is the idea that stock markets are selling off this month, because the “flash crash” May 6 made investors nervous and unnecessarily lose confidence. Sure…the “flash crash” is to blame. Never mind that the markets of the world had become deliriously over-bought, over-valued and over-priced over the past several months. Never mind that prices were supported on thinner and thinner volume. Never mind that bullish sentiment had recently hit extreme highs not seen since other notorious market peaks in October 2007 and March 2000. And, oh yes, never mind that the world economy is clearly wobbling back into slow to no growth after trillions in debt has been spent to try and prop it up. Higher taxes, higher regulation, spending cuts: these are the prevailing winds at the moment and they are all negative for growth assets especially when they remain at present, very over-priced.
As I said on May 7, markets of the world have been selling off for a host of very good reasons. Nouriel Roubini does a good job of summarizing the present issues in this clip from yesterday. We should see some bounce days and even weeks over the next few months, but the trends here are all in a down draft. If enough downside action plays out over the next few months, we could see a decent re-entry point by the fall. Stay-tuned, stay defensive. Knowing when to stay out is really the most important investment strategy we can implement.
Related posts:
- Danielle Park:Plan for your actions ahead
- Historical Volatility in last 2 months
- Refining News Will Stay Strong
- Yield Watch:Prices stay strong
- Thomson Medical Research: Defensive 3.5% Yield
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Hi Drizzt,
Actually if we were to use 2007 as a benchmark, i don’t really think we’re at a point where stocks are severely overbought or overvalued yet.
And actually looking at the recent figures released for S’pore, fundamentals do seem to be improving. While i do acknowledge that there are fundamental issues in Europe and China, personally i feel we do have abit more to go before we see a long term reversal trend. That’s just my personal opinion of cos.