MARKET METLDOWN AND COIN
FLIPPING
15 February 2018
Nobody
knows when the stock market meltdown except those that do not know that they
can’t.
What did
the recent plunge in Dow Jones and S&P 500 or even Bursa Malaysia (little
slip in KLSE index only) implies?
-the current stock valuation is too
high on average PE of more than 15
-the mentality of hit and run is
common in market (like gambling, after I win this round then I will stop
playing, only that the last round never come except when they lost majority/
all their money)
-more and more people willing to
fool their mental and believe that some tools (like Bit coin) will make them
rich and they can outwit the other players. (With some unknown reason and
confidence some people believe that they are smarter despite they are basically
doing the same things like the general)
-when they are panic, they sell the
stock. Despite the losses (actually some of them don’t care their lost, they
just want to hand off from stock as the stock is burning iron that will hurts
their hands)
If we
scrutinize the history of stock market, I found that the chance of stock market
meltdown is a random event.
It occurred out of the general
people expectation (including those financial experts)
It is always after it happened those
financial pundits know that is the cause
Human behavior play an important
part in those meltdowns
However, if
one people can predict when the market will crash, he/she will be able to
exploit such information to gain substantial advantages in stock investing.
Therefore
lots of people love to predict when the stock market will crash but in fact no
human being will be able to do that. Yet the market meltdown is sure to happen
after certain time period, which the duration is also variable.
So predicting
when the market will crash, to me is similar to flipping a coin and see when
the coin will be standing on its edge.
The
probability is low but if you kept flipping it, numerous failed attempts is a
certain. But when the time has come, it will be standing on its edge.
Instead of
eyeing or worried about when the coins will stand on its edge, as an value
investor, we should be more focus on the individual stock and maintaining
reasonable cash reserve that which can be used when the appropriate has come.
Contemplator
PS: Will the trade war between US and China really breaks out?
I think US is acting drama under influence of Trump and China has been forced to play this soap drama along.
I think that trade war will not happen in full scale of 1 or 2 trillions, both economy entity will suffer damages and US will take more.
Trump is keen to exert unreasonable taxation to import items not only at China's goods. I think the taxes on imported goods are to fill in the gap/ compensate the financial deficit due to tremendous taxation cut for US's companies.
Trump obviously enjoyed in his own made soap drama as he can be in the central of the theater and we should see how he is going to end his soap drama.
One of the most important reason why US is great is because of its open trading and globalization concept.
The is no reason why US will not continue to do so or she is digging her own grave.
