Wednesday, 7 November 2012

Are you frightened about the Fiscal Cliff? Our opinion on the US market now

Dear Friends,

We know that there are some retailers who have grown frustrated about the recent consolidation in the market, especially since QE3. QE3 did not seem to help the stock market. We know that people are calling shorts now, thinking that Dow Jones might plunge another 1000 points, STI another 100 points or KLCI another 50 points.

Our view is that you might not see that drop in the next 2 months, in the mid term. In fact, we encourage you to accumulate stocks now, going into the festive holiday christmas season. With the earnings on the way, pick up those stocks that have done well in the earnings. Not those that fared poorly. Isn't this a good time to buy your stocks at a discounted rate?

A few days back, we issued an article mentioning that US might have reached a bottom this quarter at 13000, at the 200day Moving Average support (A technical indicator used by chartists to show a strong support) 
http://www.danielloh.com/2012/11/has-dow-nasdaq-seen-lowest-point-this.html

 
Well, not many people in Wall Street are supporting our bullishness amid the fall now. We may be wrong, but how much less than 13000 can Dow Jones go?

Some of you may have heard of the fiscal cliff. Some of you may have feared about fiscal cliff that is going to happen at the end of the year in US. Especially Wall street! Everyone has been talking about it. Businesses has been preparing themselves for the increase in taxes. All Fortune 500 companies interviewed seemed to have been prepared.

The funny thing about this market is that if you are prepared for the worst scenario, the worst scenario normally would not happen. Remember the Y2K bug when people are scared and say at the turn of the century that every single computers or businesses might be frozen? It is because of the fear and the preparation that nothing happens.

If you want to know what is Fiscal cliff, take a look at this article. In it, there is an explanation of the fiscal cliff.

http://www.marketplace.org/topics/economy/fiscal-cliff-approaches-businesses-start-prepare

In short, people are scared of a) the raise in taxes for citizens and businesses and b) the cut in government spending which might lead to job cuts. Both might lead to slower spending and eventually a poor economy, as what Wall Street predicted.

As some of you might know, I have been a proponent of Asian Leading Investment Guru Mr Hu Li Yang's teachings. Mr Hu Li Yang always believe that this BULL RUN will carry on only when there is uncertainty in the market. It is the Euro Crisis that make this bull market survive and continue to run to a high.

If everything is well and economy is great, this bull run will be short lived. Please bear in mind that we are 3.5 years into the bull run now. If not for the Euro crisis last year, US and Europe might already be at the final phase of the bull run celebrating a great economy, a great housing market, a low unemployment rate and a rising interest rate.

Embrace this FISCAL CLIFF. With the uncertainty, this bull run is still intact and that is the main reason that why we think this bull run can still run on for another 2-3 years. Please bear in mind that BEAR market normally comes when interest rate is at a high, not when it is kept at 0%.

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<<Secrets of the US stock market & How it affects Singapore market>>

- What are the stocks to look at after US election?

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1) US market important economical reports and implications
2) Outlook of Singapore and US market
3) An easy way to pick the right stocks
4) How to earn a rental income every month from the stock market

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