Emotional cycle dominating world markets.

3 November 2018

Dear Fellow Investor,

Last week I touched on the present emotional cycle dominating world markets. Fear is dominating but there is evidence of stabilization. Lets look at the news flow in the US which drives world markets and some local fears:

Fear                                    Reality

Trade war	Trump is now talking with China
Interest rates moving up	Interest rates still low from a historical perspective
Liquidity squeeze	Fiat money allows central banks to create liquidity out of thin air
Mid term elections polls suggest Trump will lose	Majority off polls suggested Trump would lose in 2016. Don’t believe polls
Bombing of Jewish temple in NY	Nothing to do with earnings of companies
Recession fears	Recession unlikely with low unemployment, low interest rates and rising GDP
Bubble Nasdaq FANG stocks	Not all stocks in a bubble
Brixit no deal	UK economy booming despite  Brixit fears,
Shooting war with Russia/ China	Unlikely, the whole world would suffer
Growth slowing world wide	Value stocks coming back into play
Middle East turmoil	Not much impact on solid value stocks
Singapore under a cloud of doom	Singapore property beginning to recover, visitor arrivals up
Budget uncertainty	Malaysian budget announced Friday appears to be balanced and will address many of the issues in a positive way. Market reacted positively.
Credit downgrade in Malaysia	S & P/ Fitch reaffirmed Malaysia A- credit rating
Collapse of RM	RM has remained stable despite all the fears

 

FEAR = False Expectation Appearing Real

Markets move in emotional cycles which go to extremes like a pendulum. They return to the mean and then overshoot. Rarely do they stay at the mean.

If you have carefully researched your investments and have conviction in your choices you will survive the storm. If they pay dividends so much the better. This storm will pass.

Invest well and grow your wealth.

Bill

For the next little while I'll be feature some award-winning photos that Patrik Ekdahl sent. The first is a pair of rare Quinling golden snub-nosedmonkeys. They are restricted to the Qinling Mountains in China. Among the most striking primates in the world, these monkeys are in danger of disappearing. Their numbers have steadily declined over the decades and there are now fewer than 4,000 individuals left. 



Photo Credit: Marsel van Oosten.