My Diary 461 --- US, HK, JAPAN, Badnewspaper, 1 day Heaven 4 day

Market Thoughts --- US, HK, JAPAN, Badnewspaper, 1 day Heaven 4 day Hell

 

October 29, 2008 1:32:58 PM

Overnight, I was watching the Dow all night till around midnight and it was hovering between up +70>300 pts and found out this morning it rallied 889pts (+10%) to close at day high. Let us forget whether we have hit the bottom or not as that's not important. The key now is to see whether this squeeze we had from both US and HK a 1-3 day wonder or whether it will last for a few weeks…Seem 1-day wonder Now!

Something to explain yesterday’s crazy rally --- I think people are throwing valuations out the window but seems that they're suddenly all using dirt cheap valuations and massive oversold as an excuse to buy the market now. Guess if/when you want to buy, you can find many reasons to justify. Yes, dirt cheap valuations, we have as HK trading at all time low P/E of around 6.5x and US trading at 10.7x which is a 23 year low. Extreme oversold, YES, as HSI -65% from high and 45% in 1 month….Wait, Really? How can this argument to explain what I saw in Japan…

One of the weirdest things I observed over the past few days’ massive sell-off in Japanese shares is that the lower the valuation, the worst the decline. Of course, it has a lot to do with the yen surge and the high sensitivity of listed shares to the global economy. However, this needs not be the case in a long run perspective where low valuation reconciles with rising equity markets.

One of my super clever friends in US sees S&P rally to 1137 (+20%) till January, saying “This typical sell mentality… you buy when consumer confidence at the lows and sell at the highs. sit tight mate. All will be ok. It will be a slow grind as too many people still have sell into rally mode. Once they done and soaked up… Oops!!! I still think Sell on Bounce.

In Hong Kong, newspaper these days should be called “Badnewspaper” as it's often bearer of bad news but never any good ones. Front page of Apple Daily carry 2 headline stories:

ü         1. Restaurant owner committed suicide due to big stock market losses;

ü         2. Super rich goes into hospital after losing HK$10bil on f/x accumulators. 

Think we will get more of these suicide news as property market start seeing some big drops as property usually lag behind stock market 6-9 months. If you want to buy a flat in HK, wait another 12-18 months. I think even if we lose all our money jobless and in great despair, we still have our family. That's the most important so love life and don't end it.

Honestly getting very tired of this 1 day in heaven and 4 days in hell as market has dropped 4 out of every 5 days lately. Lets have a rally for a while and take HSI back up to 14400 then we will see from there. I'll be happy with 4 day rally 1 day down till end of yr. Shall we? Please?