Market Metaphor

9 April 2018

Dear Fellow Investor,

The last week has seen a lot of noise generated by politicians and the left wing media,    Trade wars are the current focus.  The Dow Jones plunged over 572 or 2.34 % on  Friday based on the current hysteria. 

Next week, earnings season in the US kicks into gear. Earnings growth drives profits and combined with corporate tax cuts we could see some surprises.  This will spill over to most world markets who are under the trade war clouds. Earnings growth could shift the focus.

I would like to share a market metaphor about 2 dogs fighting as reported by David Kuo of Motley Fool Singapore.

“ I once saw two dogs snarling at each other across a gate. Their tails were up, and so were their hackles.

They looked really menacing, with their teeth bared.

What’s worse, was that neither was prepared to back down. They would not respond to calls to return.

One can only wonder what might have happened, if they could get at each other’s throats. Fire and fury wouldn’t even have begun to describe the carnage.

But we didn’t have to wait too long to find out.

It turns out that the gate that separated the dogs could be controlled remotely. So, as the gate quietly retracted, the two animals suddenly found that were facing each other, without the protection of a barricade.

And guess what?

The barking stopped. Both dogs turned around and went their own way. Occasionally, they would turn back. But that was all.

It was much ado about nothing.

And that is the way the trade between China and the US could end too.

The two economic titans may not want to admit it, but they have a symbiotic relationship. They desperately need each other.

China needs to sell its goods and services to the US. The US badly needs China to carry on buying its debt.

I have little doubt that the two countries will come to their senses. They must because that is the nature of symbiosis.

Symbiosis exists all around us. In the ocean, the sea anemone and the clownfish have a strong symbiotic relationship.

The sea anemone needs the clownfish to protect it from predators. The clownfish needs the sea anemone to protect it from its predators too.

They could easily attack and destroy each other. But what good what that do for either?

The 14 GE is fast approaching. Parliament was dissolved.  The election should be by the 3^rd week of April according to Star News. This will remove a major uncertainty from the market.

Foreign funds will return and quality shares will resume their up trends once the uncertainty is removed.

Markets can absorb bad/ good  news but hate uncertainty. Uncertainty is worse and that has been the affect of the brewing trade war .

 Invest well and grow your wealth,

Bill

Synbiosis between the hungry crocodile and the teeth cleaning bird. For each to survive they must get along.