I believe there is no place other than the stock market that you will experience so much fear and greed in life. Just a few days ago, we were creeping so close to a correction. Now, just like a fire hose with the hydrant fully turned on, liquidity starts gushing into equity market. Has anything changed significantly in the last few days? Not that I know of. It is a completely different feeling and environment today. How do we explain this?
It is all about greed and fear. Emotion and expectation can run high when there is hope. However, when there is hope, there is greed. When there is greed, there is fear of losing. When there is fear of losing, there is panic. The reverse is equally true. When emotions are down, we lose hope. When there is little hope, we start to fear. Fear will eventually lead to panic.
We have a famous saying from Sun Tze "If you know your enemy and yourself, you can win a hundred battles". Knowing yourself is just as important as knowing the market. Learning to control thy emotions can make you think clearly and act rationally. In the meantime, happy investing.
Disclaimer: The content in this blog contains purely my personal opinion and it is in no way a substitute for professional financial advice. You should seek advice from a professional financial advisor with any question regarding your financial matters.
Thursday, November 4, 2010
Wednesday, November 3, 2010
US QE2
Today, we finally see some lights in the battle of the US election. Right now, the next unknown factor is the breadth and depth of the quantitative easing II (QE II) policy. Whether this proves to be eventually right or wrong, only time will tell. For sure, QE II will force US dollar to depreciate further. So what! The US economy is not growing fast enough to boost the employment rate. What's the use of having strong US dollar when the economy is not able to sustain it. Inflation will definitely come in the future. But, what choice do they have?
Anyway, US has the ability to print trillions of reserve currency and the world will be have to absorb it one way or another. This hot money is already flowing into the emerging economies like Singapore. With QE II, I believe this will continue further. Is this sustainable? - this is questionable. Be it QE I or II or III or IV, the effects of the liquidity injection will diminish eventually. You can bet that our authorities are monitoring these events very closely. The newly introduced property measures will help to ensure that the hot money will not create a property bubble that may burst when the "music" stops. The appreciating exchange rate policy will hopefully address the inflationary effects brought about by the recovery in the economies of the regional countries and growing domestic demand. As for stock market, my feel is that we are not in euphoria state yet but that does not mean we will not experience any correction in time to come. Volatility is still prevalent in the market, so invest with care.
Disclaimer: The content in this blog contains purely my personal opinion and it is in no way a substitute for professional financial advice. You should seek advice from a professional financial advisor with any question regarding your financial matters.
Anyway, US has the ability to print trillions of reserve currency and the world will be have to absorb it one way or another. This hot money is already flowing into the emerging economies like Singapore. With QE II, I believe this will continue further. Is this sustainable? - this is questionable. Be it QE I or II or III or IV, the effects of the liquidity injection will diminish eventually. You can bet that our authorities are monitoring these events very closely. The newly introduced property measures will help to ensure that the hot money will not create a property bubble that may burst when the "music" stops. The appreciating exchange rate policy will hopefully address the inflationary effects brought about by the recovery in the economies of the regional countries and growing domestic demand. As for stock market, my feel is that we are not in euphoria state yet but that does not mean we will not experience any correction in time to come. Volatility is still prevalent in the market, so invest with care.
Disclaimer: The content in this blog contains purely my personal opinion and it is in no way a substitute for professional financial advice. You should seek advice from a professional financial advisor with any question regarding your financial matters.
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