Tuesday 4 September 2012

Will Europe take a leaf out of Ben Bernanke books?

Dear Friends,

I sincerely hope that Europe would learn from how Ben Bernanke handled Wall Street's expectations of QE. I think he handled it well. Ben to be is one great manipulator of market sentiment in the Wall Street.

Give anyone the job of handling an economy that still has a more than 8% unemployment rate, I do not believe Dow Jones will be able to reach this height. To me, Ben may be an ineffective economist but he is one good heck of a trader! He knows Wall Street games!

Trust me, with him around, there probably won't be much of a collapse in the stock market this year.

Recently over the weekend, I went to a big investment event. There is this trainer that is so Bearish about the market and predicts a BIG BEAR MARKET collapse in year 2012! He definitely is a BEAR, he says!

If we investors or traders follow his bearish sentiment, I think probably we would have lost quite a big chuck of money these 3 months from June to August.

The thing is to navigate through a bear market and a bull market is 2 different ball games. In a bull market, we can buy and hold stocks. In a bear market, we can't short and hold. Market timing in a bear needs to be fast and swift. It is short and cover fast.

I do not believe we retailers have the power to short and hold for 3 months to wait for a bear market collapse, let alone a longer time duration.

Do you really think before Obama election, we will have a bear market?

If you search on web to read on stats, you would find out that 70% of high occurs in the last quarter based on a 100 years study of election year since 1900.

Good luck to those that believe the yield curve and money flow in bonds this year.

Btw, when the time comes for us to be bearish, we would let everybody know. There will be signs and indications. Our market sentiment indicator will tell us too.

So far, it has not happened...

With Ben Bernanke around, I am sure he would think of ways to keep this market up and running at least into next year.

I hope Europe will study what Ben did on Friday, and come up with a plan how to tackle the expectations of the world in the ECB meeting on this thursday!

Btw, anyway, bad news is good news now. Look at China today! With a poor PMI report, the index is up on QE expectation also.

HOW can there be a BEAR MARKET this year?  I really questioned.


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