Rainer's Investment Insights

"Never Bet Against the Fed"   It is an old saying and of course, every time they say it, we wonder whether it still holds true.  Despite the blatant FED intervention in currencies and capital markets, we forecasted a pullback of sorts, let's check and see: At SingCapital, we run a best fund list (mutual funds), consisting of 97 funds, covering all asset classes and regions.  Out of these 97, 62 are in the red for the last week, including some bond funds. On a monthly return, almost half of them record a negative performance.  The ones, which recorded peak performance recently are those connected to Global Resources, like Latin America and China, while Gold related funds had a wild ride up, only to break down rather quickly thereafter.  Remember my forecast of last week: the first effect to show up to confirm a major peak and turnabout was ... "Gold prices to fall below $1338 per ounce." We can tick this one off then. In tandem, I expected a turn in the di...

On the surface  The superficial observer might say, "nothing has changed, since last week". That is just it.  Time has passed. And one week in stock market terms is long indeed. Rarely has there been a week like the coming stirring up my apprehension as I agonise over two extreme outcomes:  The rally continues - Are we going to be bamboozled by a complete negation of stock market cycles? -  The correction comes - and we'll be knocked for six by a crash that ranks alongside 1998, 1987, 2002 - even the one, 80 years ago from which it took 15 years to recover?.  Drama?  You bet. CRASH OR EXTENSION OF THE RALLY? For complete remission of the "cyclically confirmed" downside potential, we don't need too much imagination:  If one trader can cause US indices to go into free-fall (-10% in 20 minutes, in May), we could easily envisage the world's key decision makers finding ways to do the opposite and -mustering the firmest of resolves - use every means at ...

"Conquering" the rewards offered by Chinese stocks, we are diverted mainly to those available in Hong Kong (Hang Seng), or our STI. The few stocks that are listed on major indices, or the so called Greater China regional benchmark are greatly diluted by currency fluctuations and foreign investor activity.  An Old Story I have been highlighting in every seminar in January trough to September that it is the emergence of China's own stock market trend, which would change investment parameters around the world in a big way. It is happening! Indeed, we need to look toward August 2009, when the stocks in Mainland China recorded a yearly peak, in line with global equities but then started a highly significant correction, following government intervention to an overheating economy and house prices in particular.  The correction lasted almost a year with a final bottom in early July this year, - just as I had indicated in our China Seminar in July. The sole reason why this i...

Faced with some scurrilous comments about "missing the boat" in an upward trending market recently, I am going to stretch your grey cells a bit today, - if I may?! Firstly, exiting equities early September and staying out of the markets since then was a tactical move to stave off any negative impact in light of deteriorating fundamentals and a slue of technical indicators.   Secondly, switching back into equity - during the second week of September - was an option:  based on weak trends (low volumes, overflowing liquidity)  against a negative cycle, but supported by reasonably strong technicals, especially for Asia.  Thirdly, using our investment tools (unit trusts, traded on platforms), we would struggle to switch in time and - so we presume still - switch back out in the space of - what? - 3 weeks! That is why we did not follow the signal.  Now, there are some who say, actual results prove me wrong.  Let's see:  Here is the chart ...

Our Model Portfolios - still cruising at a high altitude to the markets latest update October 14, 2010 MODEL PORTFOLIOS SWITCHED TO A SAFETY FIRST PORTFOLIO ON SEPTEMBER 6th, 2010.  We chose bond funds and money markets.  The strategy was to benefit from expected market turbulence and a rush to safety - when the markets correct. - As we saw the rally continues. What should be clear to every investor now is that this rally is running on the back of liquidity only, and not real demand and supply functions.   Graciously, our arch-conservative strategy worked nonetheless, as many bond funds rallied in tandem.AND the SGD continues to outperform against just about every notable currency. By switching to safety the maximum gain portfolios missed amounts to about 4.5% (high risk profile), less than 3% for the balanced portfolio.   There is an extra page on this blog dedicated to the updates on the models. Unless you have a portfolio with me, these...

DJIA at this level is really in "Nowhere-Land". It could go either way, theoretically. The next resistance level is the April 2010 high of 11,200.  It just makes you wonder, whether the index will fall as precipitously as it did after this year's April peak, or whether it is caught in a renewed "reflation" exercise, a repeat of April 2009 to January 2010! (see graph below) This beige shaded period shows an upward move that contrasts sharply with the DJIA Supercycle. The Supercycle suggested that a correction was due after August '09. It did not happen for DJIA, nor did it for most other markets.  Indeed, the only equity market that did correct was Mainland China. Will we see a repeat of such a reflation effect NOW?     Short-term pattern tend to drive sentiments towards extremes such as we saw last week. It is too early to speculate what exactly drives the latest advances. We are fed old buzzwords like " stock markets rise on a wall of worry...