I was told by a broker friend that we're seeing the beginning of another bigger bull run than that of the last. I'm sorry, Kenny my friend. I very much doubt it. Yes, we're indeed seeing another mini rally, a technical rebound much needed after the last 6 months of doldrums. As for the beginning of a bull run, not this moment I'm afraid. The world is still reeling from the tsunami of Sep. 15 and the numbers are simply the worst we've seen. & it might well gets worse before it gets better. I'm hopeful it will get better after the gigantic amount of concerted measures taken by various governments to pump money (by simply printing, it seems!) into the system. How long it'll take? My take is about another 6-9 months. We should be recovering sometime around Sep. 2009 to Mar. 2010, just in time for the 2010 Expo in Shanghai (May 1 - Oct. 31). In the mean time, I'm expecting a little more run-up in the markets around the world before another big correction in a month or two. Currently (& for next 3 months), it's probably range trading for the Dow around 7000-9000. For the Hang Seng, around 13000 - 18000.Some asked, what do you based those on? Experience & intuition. I was really uncomfortable with the market levels in early 2007 (granted Hang Seng index shot through the roof for quite some time before it took a reversal as with the SSE Composite (Shanghai Stock Exchange) index), so I took off work & left for continuing studies. It was intended for a year but it stretched into two instead. Now that I'm back to work, exactly about 5 days after I was back to my desk, markets around the world began to turn around. That was exactly a month ago. For the past 2 weeks, the gains are tremendous. Some stocks have as much as doubled or tripled from its lowest point. In a mere 2 weeks! If that's not euphoria, what is?
From my past experiences, the markets always over adjust; be it on the upside or on the downside. It fell off the cliff for 6 continuous months & then it is now correcting that. Has it over corrected on the upside? Perhaps not. There should still be some more room to go (after some intermediate dips). Despite all these, it is still not a bull run to me. A bull market is one where at least the world economies are operating normally to begin with. It is not one whereby millions of jobs are being lost, bankruptcies are rampant & homes are being foreclosed on a daily basis. How can financial markets be in a bull run when it is precisely due to all the frivolous & irresponsibility of Wall Street bankers, fund managers (& hedge funds) & speculators (& derivative traders) that we are where we are today?! Have we so easily & quickly forgotten the lessons from the past run-up? My gut feel tells me another 'earthquake' (in the financial markets, that is) is just around the corner...
Speaking of earthquakes, another one strikes Central Italy today. Since the last big earthquake in Sichuan, there had been an increasing number of earthquakes around the world. Most of them are minor, yet, if my recollection hasn't failed me, there is an increasing number of quakes in recent months. I once saw a documentary on supervolcano & wonder if indeed we are nearing one. Just a passing thought...
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