Tuesday, July 7, 2015

Just some passing thoughts

For some reason, lately I'm just not feeling excited by the markets. Everything is so... meh. So I'm just going to ramble on a bit on some things on my mind.

Personally, I am pretty happy to hear the #Oxi outcome. Who knows what will eventually happen in Europe, but I think this is the first step towards addressing the problem instead of kicking the can down the road. Will they go off course and kick the can down the road? I think it's actually very probable. I don't know why people think an exit from the Euro is a given right now.

I am a bit puzzled why both the precious metals have instead been knocked down instead of spiking up. Bitcoin has risen recently with the Greek referendum, increasing by about 15% since early June. Across the board, reports that increased retail demand for precious metals has been hitting the wires, yet there seems to be no translation to actual prices. I continue to eagerly buy precious metals at these prices.

China is back to where it was when I talked about it in April. Yeah, I never really thought a 5 sigma move in 1 direction would last either. I missed "calling the top" in the China indices by a week when I was blasting how their banana traders was buying into the market at PE ratios of 70. After it peaked, I talked about how farmers were becoming full time traders. I mean, what could go wrong?

With China stocks pretty much all moving into official bear market territory, the Chinese government is freaking out. Of course they have to. Millions of dumb retail investors have flooded into the market and most of them are in loss positions. If they were professionals, they would have been in the market a long time ago and still be up over 50% in their positions.

Of course I can pat myself on the back because on 15 November 2014 I did say that China "looks like an amazing buy", but I didn't take actions to my thoughts, so what right do I have to say that? It just is slightly comforting to know that my big picture view on valuations isn't so "fringe" after all.

Basically with the threat of massive blowback from the population, China is pulling out everything that they've got to stop this crash. Everything. The whole she-bangs. They next step is probably to freeze the whole market, haha. Generally, if investors were unleveraged, these sort of crashes can slowly recover and put back investors into equity positive situations. Having to sit in unrealized losses is normal for all investors.

However, Chinese people being... Chinese, they are probably all leveraged up. Guess what that means? Tons of people are sitting in massive losses and thousands are getting margin called or having their entire accounts closed out as we speak now.

It is sad to see such things happen, but that really is the price to pay for not knowing. I swear, people bargain for dollars and cents at shopping markets, but dump tens of thousands of their savings into "hot tips" they read from a newspaper, or worse, a blog. Is it their fault for being so naive? That's a big fat yes to that question. Unfortunately they will have to pay for their own mistakes. I wonder if suicide statistics are published in China. I bet there was a spike with June stats. I'm not being heartless about it. I'm just stating facts. Suicides spike during market crashes.

In Singapore and in the US, everything so far seems to be "contained". I am feeling rather itchy fingered to pick up certain shares that have recently fallen, but I am holding back on going trigger happy. It's just a hunch, but this feels like the calm before the storm to me.

It's getting boring just seeing the markets bounce around going no where, but I guess this is a "development" from the BULL MARKET WOOOHOOO narrative that was everyone's favourite cheer a few months ago. Like a parabola, the market needs some time before it changes direction. Is this what we are seeing now? Feels like it to me.

But then again, I've been on the cautious side and also the "wrong" side for most of my investing career, so what do I know?

That even a broken clock is right twice a day.

2 comments:

  1. Less than 6% of the Chinese population is invested in the market. The impact isn't as bad as the rest of the world lets on.

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    Replies
    1. Hi Anon,

      I've never heard of that stat before, but that's quite interesting. 6% of the Chinese population in absolute numbers is equal to 25% of population of the US or 100% of the population of Germany. And of course there are many people in those countries that are not invested, too young, too old, not interested, invested in other things etc.

      If you only want to compare it based on percent of population, Only 10% of the population in the UK has investment accounts.

      6% can mean something or nothing, it depends on your base of comparison.

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