18 March 202118 March 2021The unwavering Fed. Which is also how central banks should act. A central bank that keeps changing its policy as and when, would only loose the trust of the people.The Fed mentioned that they would not hike interest or taper its bond buying program even though current situation does not really resonate well with this. Unemployment declining, company's earnings improving, more people getting vaccinated and the opening up of country borders around the globe. All these does not really warrant a lower interest for longer or further bond buying environment. However, during Powells speech he mentioned 2 things quite perculiar.1. Expectation on core inflation to hit 2.2% this year (higher than his target of 2%)2. GDP to rise to 6.5% in 2021. (Pre Covid growth in 201
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Dereks Thought
25 March 2021 Bond yield retreated but so did stocks. The past few weeks we saw how easy money could boost markets. A term i would like to use - Retail Investors frenzy. So much money in my pocket but no where meaningful to spend, other than the stock market that is. But what happens when the effects of these policy fades? And this has happened in the chinese markets. I would consider China as the pioneer in this whole covid era. They were the first to get hit by Covid, first to get out, their stock market was the firsr to recover and now their stock market is the first to see the effects of government policy fades. CSI300 Hang Seng Index (HSI) Looking at the charts, the CSI300 lost 17% and HSI loss 10%. This is why fundamentals of the companies you invest in is important.
Dereks Thought
Dereks Thought
Dereks Thought
Dereks Thought
17 March 2021The calm before the storm? Everyone is waiting for the HUGE release of words coming our from Jerome Powells mouth today. At least thats what all the news are talking about. Markets are usually forward looking and their expectations are usually reflected in the charts. However, this does not seem to be the case now. The fact that market stayed stagnant yesterday, reflects that investors are unsure of what Powell might say.Dow -0.39%, S&P500 -0.16%, Nasdaq +0.09%You can say that Dow and S&P saw some profit taking yesterday.So what am i doing?Currently im staying out of the marker firsrt. If you read my previous post, you can see im a little pessimistic about all these liquidity. Quoting #gameofthrones, A Lanister always pays his debt. The Fed would have to pay his d
Dereks Thought
13 March 2021 Topsy Turvy week for the Technologies but gradual growth for the rest. Nasdaq started the week with a (-2.48%) decline on Monday but went to as high as (+3.97%) during the midweek before closing +3.09% higher from last week’s close (5 March 2021). Comparing with the Dow Jones, it was up the whole week with the lowest point +0.05% higher than last week’s closing price and the highest point was up +4.12%. Both the Dow Jones and S&P 500 also closed at an All-Time-High this week. Dow JonesNasdaqIt seems from the charts, regardless High Bond Yield or Low Bond Yield, the Dow still shines. Comparatively, the Nasdaq index is more prone to interest rates movements. Now for a long-term investor, which would you prefer to hold?It seems as though if I want to know if Nasdaq will move
Dereks Thought
Dereks Thought
10 March 2021.What is a Correction?According to Schwab.com, a correction is a declines by more than 10% (but less than 20%) from its most recent peak. Its called a correction because historically the drop often "corrects" and returns prices to their longer-term trend. Sustained period of correction could lead to a bear market.Last night stock market saw a frenzy of buying. Nasdaq price rose 3.69%. Bitcoin is hitting its U$ 56k Level, Meme stocks like Gamestop rose 27% and AMC rose 13%. Reason?Analyst credited yesterdays gain due to a reduction in 10 year bond yield currently at 1.528 levels( down 4.13%)In my opinion, yesterdays gain could be partially due to retail investors frenzy. Taking reference in Nasdaq and Dow Jones 5 year chart.Dow JonesNasdaq If we believe that a correction i
Dereks Thought
Dereks Thought
9 March 2021.Late December last year 2020, i predicted that rech stocks were over-valued. And that we would see a short term correction in growth stocks. Money has to be parked somewhere. And hence expected a sector rotation (away from gowth into traditional assets) and country rotation (away from US and Europe into China). I also expected a support for USD and Gold. But 1 thing i did wrong was to hoard cash in SGD. i should have converted all to USD.As such i was hoarding cash, awaiting for this opportunity. At the point of writing, my portfolio consisted many income stocks. What was missing was a growth components.Fast forward today, interest yield is rising and the US is moving on with its 1.9billion in stimulus. So the big question, where would stocks go from here?K-Shape RecoveryRecal
Dereks Thought
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