Jay,
Am back in KL after a short and thoroughly harrowing trip. I learnt a lot during this trip, how there are so many perspectives around, and you have to confuse yourself with ALL of them first, then go for walks, contemplate, watch before taking actions, especially if it involves taking a loss, and charing course.
About 50% of me tells me that there is probably where I'm headed, but before talking directions, let me outline some learnings from this trip:
a) Lots of people are making money in this market: read
iiplatinum.com
which was included in the June edition of Institutional Investor magazine, which I read more or less cover to cover, first time, this time.
b) The action seems to be a lot focused on hedge funds: read
institutionalinvestor.com
A lot of money was taken off the table by these hedge funds during the past 2 1/2 years, so the traditional funds and of course, individual investors are going to have a tougher and tougher time waging their bets against these guys. There is of course, a more philosophical issue with some of these individual fund managers making the kind of money they made in this market, when so many 401Ks of individual people have been wiped off, but that's another topic for another day.
c) Life in affluent markets like Switzerland seems to go on pretty normally. The 911 incident came and went, and the Swiss stock markets suffered badly during the past year, etc but people are still spending, and more importantly, there is a new optimism in Europe, due in part to the introduction of the Euro, the emergence of East European markets as real economies, new fund flows from petro-rich countries to key financial markets like UK, Luxembourg, Switzerland.
d) Reading the little of the latest Q2 outlook for tech companies, I am inclined now to believe that perhaps, just perhaps, there is a turning of the tide here: just imagine, if there was even a slight glimmer of light for the likes of JDSU, Corning, Ciena, Nortel, and the storage vendors like Brocade, Qlogic, etc....just imagine for one moment, the light did appear for them, we could be talking of Nasdaq lifting off to 2000 again, as these stocks are still selling at distressed prices.
e) The overarching uncertainty which I keep worrying about, and leads me to this analysis/paralysis state is the event risks. It can come anytime, from anywhere, and if it does, it will depress markets again. Both the FT, WSJ and Barrons ran articles over the weekend repeating that the bear market is not over yet, and that we could be testing new lows again, but just imagine, what if they are wrong, and there is now light appearing at the end of these tunnels....
In conclusion, I feel for the moment at least:
a) stocks, esp US stocks may go for a strong bull run from here
b) gold price may be heading below usd 300 again, barring some unforecasting event like a terror event, accounting screwups at large companies or major earnings negative surprise.
c) the usd may have hit bottom already, and could well go back to usd 0.90 again, against the Euro.
Who knows....at this point, I wish I knew a lot more about hedge funds, how they make such incredible profits, how individual investors like us could 'compete' with the likes of them, and of course, whether there is a prospect that some of them could be future-soon LTCMs (what a delightful prospect :) ), but my mind became quite fearful again, as I watched "A Beautiful Mind" for the 3rd time, and realised what a complex world of experts one takes on when investing in stock markets these days, including people who run these awesome computer programs based on these models to make money before the likes of me can make up our mind as to what to do.....I could go on....
Selva |
