Aaah, finally a smart proposition, you are about the only person wise enough to say that "equities are trying to catch up because prices have been overly depressed by stale confidence"... I totally agree. Many are of the view that stock prices have run ahead of fundamentals. While that is partially true, we have to say also that share pries have been unfairly hammered over the last 3 months of 2008. Thus, much of the rally this time around is just to get us back on fairer valuations, and not necessarily running ahead of a recovery.
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chanyip said... Dear Dali,
I have a question. When you said the market is ripe for a correction, the decrease in DJIA will be around how many points? 100,200,300? Hence, if that is so, what about for klse?
Thank you very much!
Response:
I think the Dow will find a new bottom at 8,000 while the KLCI will have very solid support at 980 for the rest of the year.
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- sopsky said...
Hi Dali,
"Well, you should have by now. I thought it was very clear from my posting on the yen dollar rate as a way of reading risk aversion."
You mentioned the above but on your dollar/yen posting, based on current rate of 95.xx, shouldn't one reduce the equities holding to 1/3? Yes, it did overshoot the 100 mark and that was went all would have gone in but shouldn't one need to re-balance based on the new rate?
Thanks
The rates are only a guide, if it has gone past 100, the risk aversion thing is technically over. Even if the rate falls back below, its more just volatility in the rate itself, I think the risk aversion things has subsided significantly now.
p/s photo: Amanda Strang
What is your reading on the global economy. Are we out of wood or abyss yet?
Are the equities tried to catch up after investors overly price in depression before this?