HSI down 8%+ YTD

What a way to start the year with the Hang Seng Index down more than 8% year to date. But from a very imprecise perspective it looks like it is just another correction and we are still on an upward trend.

Screenshot 2014-02-06 10.20.06

Well we can’t tell much about the future just from looking at the chart, we just have to wait for the data to come out to make a meaningful judgement. Or if you want to get ahead of the data then I guess you can always observe the world around you, by talking to business partners, consumers, suppliers, employees etc.

Usually the market will surprise people more often than not. No one has any clues what will come, and if you are sitting on the majority side I think you should be pretty worried because, as always, most people lose money in the stock market (or any markets for that matter). As for my own perspective, I am fairly cautious this year. I do not have much of an appetite to buy on the dip like last 2 years. I just want to raise my cash levels and I don’t have a big reason for it. I guess it is just my subconscious mind telling me to be cautious this year more so than the last 2 years. Besides, things aren’t really that cheap anyways. There are some bargains out there but they are very iffy. The ones I really want to own are not cheap enough to buy outright.  Another reason why I am cautious about this year is because -why is everybody so damn optimistic about this year?  From fund managers, to the random stock market commentators, most of them are looking at another good year ahead for 2014. They might not be too optimistic about China and emerging markets, but the developed world is very flush with money and optimism.

I am not a macro guy and I do not wish to be a macro guy, but sometimes these things do get into your head. The most able companies can make a killing irrespective of these cycles. Politics as well, I think politics should be viewed with more emphasis than the macroeconomy. In the end, it is politics that drive the macroeconomic cycles.

One thing I want to tell others when the economy collapses and the stock market crashes and the whole world seems like ending – “I have tonnes of cash to buy stuff.” Whether they are yachts, or cars, or houses, or stocks, it is always more satisfying to buy cents on the dollar.


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