Thursday, August 20, 2009

Is This Rally Too Much?




Is this rally or bear market rally or recovery rally just a tad too much, ... too much hot air, too exuberant, too optimistic? Is the market running way ahead of itself. I found the following chart from dshort.com which places where we are in the recovery process, compared to the most severe crises of the past. The current path is marked in BLUE. The current recovery is already more "exuberant" than the recovery path taken by the internet/tech implosion in 2000. However, it is still within fairly safe territory when compared to the recovery path taken following the nasty oil crisis in the early 70s. Bottom line, its not too exuberant ... (yet).

While many were jumping up and down that we are headed for the Depression again, well the gray line tells us what hell they went through in the 30s.

Our economic and financial crisis will always be there and will haunt us every few years, but the recovery process in the present days will ensure that the recovery process will be relatively quick because: we have a much better understanding of the usage and effects of monetary and fiscal policies; we have a more transparent decision making process by most governments, and whose decisions will be critiqued and deliberated instantly via the net and media - urgency and clarity; and we have most governments being more proactive and willing to attack economic and financial crises together.


[via dshort]



p/s photos: Haruna Yabuki

2 comments:

Terrance said...

Sifu

What is your take on this counter, Perisai?

The company latest quarter net profit was RM16.03 million, translate to EPS of 5.44 cts. Even after taking into consideration the recent increase in shares after bonus issues, the EPS is 2.42 cents.

The company has secured a 4.5 years contract of bareboat charter contract, lasting until year 2011. It has the latest technology, a totally new cost effective mothods of developing small and marginal oil fields.

Fair value would be above RM1.00 if we annualised the current EPS and multiply it with PE of 10.

So far since its listing on 5.7.2004, the company has not made any loss. In my opinion, the counter is undervalued.

Thank you.

Encik Wan said...

Never argue with the market. But to conclude printing massive amount of money has no repercussion, that I am not sure