Monday, May 17, 2010

Sell in May and go away? World cup on stock markets?

1) 'Sell in May and go away' , this is the common saying that has been around for years.

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So as you can see, based on the US's S&P 500, if you sell in May and buy back in Nov, you will generally do better (though one thing to note is that, on average, all months actually generate positive returns). In Singapore's context, I am not very sure, but I guess that it should show a similar trend as the world's economy are interlinked.


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I have also read reports that during the world cup period, stock markets will drop too. This is because people will be pulling money out of stocks to bet and/or spending more time watching soccer and hence not be as participative in the stock market. These reports were also supported by accompanying statistics.

Though I do not believe 100% what these reports have said, I do believe that they should be some truth in it, considering the statistic were not faked.

In conclusion, statistically, it is not a good time to hold stocks over the next few months. Personally, I have sold away around 80% of my holdings, leaving behind some preference shares which I few should be relatively non-volatile.

Also, besides the above 2 reasons that I have mentioned, I am actually going overseas for my grad trip.(Will be visiting Malaysia and the Shanghai World Expo) Thus without the time/access to my trading accounts, I would rather take my profits and have a peace of mind during my trips.

Wednesday, May 12, 2010

Graduated! (Greece, Goldman, DJIA)

Sorry for the lack of posts, was busy with school exams. But finally,I have graduated!

Anyway, many major events happened over the past few weeks. Here are some of the more interesting ones:

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1. The biggest one is the Greece bailout. It caused the market to go into a panic stricken sell off mode. Hence I bought up some blue chips last week too. Not 100% sure that the market will not be sold down again, but I believe that the fundamentals of Asian markets are strong and especially that of Singapore. So I have basically bought into Singapore companies dealing with land/telco. Also, most of Greece's debt is limited to the EU, with little exposure to the rest of the world. Even America did not take on too much of its debt. I am not saying that it will not affect Asia/Singapore, but rather, I do not personally think the actual impact will be too big.

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2. The Goldman Sach case. It might be true that Goldman Sach might have a little conflict of interest when structuring their products. BUT, I feel that if the institutional investors can afford to pump in so much money to buy the products, they should actually be smart enough to understand the products before buying it. I mean, we can understand if aunties/uncles who invests $20,000 in structued products and got mislead, but for companies who spend millions in investing, there is really no excuse for them not doing their homework prior to buying such products.

3. The drop of almost a 1000 (approx 10%) points in the Dow Jones Industrial Index last week before a strong recovery to close approx 3% down.. There was speculation that some person keyed in a sell order of 'billions' instead of 'millions. However reports were quick to say that this wasn't the case, and investigations are still undergoing. Personally, I choose to believe that it is due to some computer glitches. If you do not know, with the invention of algorithm trading (i.e computer trading on its own based on predefined rules), it has actually increase the liquidity in the stock market by more than 50%!. So in this particular instant, say for example when a particular stock get sold off by a large institutional investor, it might have triggered a involuntary cut loss mechanism in many trading algorithm, which in turn exacerbated the effect and caused the almost 10% drop in the index.