Thursday, January 18, 2007

Market Strategy

This applies to all stock markets I guess. Its frustrating, isn't it? The market keeps rising but you cannot find anything to buy. Every day that the market closes higher makes you think about how it was during the last market collapse. You wonder how that will happen, will you be caught (again), ... This bull market is not a recent one, I have already said many times early last year that we are already in the midst of a global bull run, and many were not aware of it. What we are seeing is the last 25% of the bull run, where everything looks good and rosy. Interest rates going down, oil prices whacked down, earnings reports all solid,... The last few weeks have been more exciting for Asian bourses. The currency factor is a major impetus.

Have a look at the blue chips, most have gone past their anticipated fair values, who would want to buy more, how much higher can they go? Can Genting go to RM40? Can Maxis go to RM12? What about Resorts... RM18?? Seriously, these figures are not that far fetched, and you can almost spin a good story to support those prices. Companies leading the way over the last few weeks had been the plantations and top-notch blue chips (just mentioned). I still think there is a bit of life left in the run evn though its on its last quarter hind leg. I think some switching will be to GLCs to propel the index past 1,150. As mentioned a few months back, I think the market will hit 1,250 sometime this year as a high.

The big caps helping the push in the coming days and weeks should include Uem World, MRCB, Sime Darby, Tenaga, Telekom, Maybank, AMMB...
If you consider this group, their share prices are still not very, very high yet. So, there is room at the top of the stairs. This market and also regional markets are awash with liquidity. Bad news will be played down and decent news will be greeted as the second coming.

Danger is always there at these levels, these are great times to rebalance your portfolio - throw out those stuff you have bought for the wrong reasons, and do not leverage up now. That is just silly.

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