Nazri Khan
It is a brutal market.
January has ended yesterday and the world stock market have recorded the slowest-year-start and the worst January losses since 2010 (Dow Jones down 4.8%, Bursa down 5.3%, MSCI All World down 5.6%). There is a saying as January goes, so does the year.
While I agree this is bad omen and Bursa market will go down next week due to bloody currency sell-off now (ringgit now stands at 3.3500, four year low), I am confident that the medium-term odds are in our favor if we remain optimistic.
Think of these data closely :
1. There are 33 recessions and 25 bear markets over the last 100 years and yet global stock market gained a whopping 18,000% while Dow Jones profit a total of 23,000% since 1900.
2. The stock market fell 10% from a recent high at least 97 times over the last 100 years before rebounded to a new high within six months.
3. Stocks lost a third of their value at least 12 times over the last 100 years and yet recover to a new virgin territory.
4. Dow Jones makes an average gains of 12% per annum since 1900 while Bursa KLCI scores an average 18% per annum since 1977 (a total gain of
1980% from 1977-2013).
5. Since 1900, there are approximately twice as many up years as down years. The upside gain is also twice as big as downside loss, meaning more money made when market went up than lost when market went down.
6. Despite the past great bear market (i) Great Depression 1929 (ii) Vietnam War 1968 (iii) Iraq-Iran oil crisis 1979 (iv) programme trading crash 1987 (v) Asian currency crisis 1998 (vi) dot-com bust 2000 and (vii) the latest subprime crisis plunge in 2008, the whole world stock market continue to roar to a new record high within three years after the crisis.
In summary, the data shows that stock market is often roiled by irrational fears and yet being an optimist will eventually pay off. Being an optimist doesn't mean bad things will not happen. They will. But we should rather look beyond the bad things and convert it into positive opportunities.
Affin View : Bursa To Fall Further, Correction On Going
Total Correction : 105 points fall (5.3% dip from last high of 1882)
Next Target : 1760 Level
Strategy (Aggressive) : Short Index Futures (FKLI, S&P 500, Dow, Nasdaq), Short EUR/USD, Short GBP/USD, Short AUD/USD, Short EUR/JPY, Short GBP/JPY, Short AUD/JPY, Buy Index Put Options (SPY, DIA, QQQ, IWM)
Strategy (Conservative) : Buy 2014 Stock Leaders On Dips
Top 10 Stock Trading Ideas : MISC, Pbbank, HLFG, UMWOG, Maybulk, CMSB, Uzma, CBIP, Yinson, DKSH
Trivia : World largest IPO Alibaba to come next two months. Buy.
Good luck.
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