Expecting "Santa Claus Rally " in 2018 , No ?



Christmas is just around the corner and some of us may be busy doing the Christmas Sales shopping to buy a gift or present for your loved one and some may be "worry ", looking on the screen seeing DJ dropped by few hundred points each day.

Yes, guess there will be no so-called "Santa Claus Rally" this year as the market expected to be in a volatile mood and swing viciously.

Santa Claus Rally ( from Investopedia.com)



Although the US market has corrected by more than -12% from the peak in early 2018 but is still far from long term mean level and not to mentioned about crisis level.


My last update of world market index regression line as below :



While S&P500 had dropped below +1SD but the DJ and Nasdaq still hovering around +1SD which I think still have much more room to move in downward trend if the current pessimistic about market continues.







Now, how about the Asia Market? 



Emerging market like Indonesia / Turkey / South Africa/ Argentina been affected by this so-called " capital flight " in view of the stronger dollar and rising interest rate and also concern about their countries macro situation like debts and currency devaluation. 
As such, most of the major Asian stocks market also being affected by these negative sentiments, especially China and HKG market which was the most affected and impacted by the current trade war issue.

SPDR China ETF ( -27% ) , HSI ( -20% ) , Nikkei ( -20% ) , STI ( -16% ) from the peak in 2018.

** all moving below the long term mean level except Nikkei










How about deploying your "war-chest "?




With long term mean at the above level as compared to regression chart which I have plotted in early 2018, some value may start to appear and I talked about not deploying my "war-chest" in Jul 2018, except doing some "portfolio rebalancing" after selling my M1 and First Reits.

As above mentioned, one of the keys to successful investing is the "patience " and of course the others will be "TIME " in waiting and letting your dividend & investment to do the magic of compounding.


Patience & Discipline are important in how and when to deploy your war-chest, you may not want to end up with the situation that you are running out of investment fund during the crisis. Of course, nobody knows when will be the bottom and low could be lower, but at least one would have some fund to deploy when the market really hit -2SD (a golden opportunity to accumulate stocks if you still have fund to invest ) which is exceptionally rare and most of the time-triggered by a "black swan" event.


I will start to deploy some of my war chests if market drop below 2900 level ( which is around -20% from the last peak)....and continue to buy when index reach 2600 (-1SD ) and 2320 (-2SD).


How about you? any plan on how to stage and deploy your war-chest in current market condition?


Cheers !!



"Christmas is about spending time with family and friends. It’s about creating happy memories that will last a lifetime. Merry Christmas to all of you and your family! "





Comments

  1. Hi STE, if we are looking at sTI index or banks, then we follow the board market, for some stocks (non penny) there are already at -2 SD at 8 years low lol

    But buying low get lower

    ReplyDelete
    Replies
    1. Hi Sillyinvestor,
      Yes, indeed some of the small cap already at - 2SD, value may already appear but as you said it may drop to lower if overall market sentiments continues to deteriorate..May just need to buy slowly ..
      Cheers :D

      Delete
  2. how much is your war chest now? 20%? are you going to buy more singtel at 2.92?

    ReplyDelete
    Replies
    1. Hi LKH,
      About 17% now, I am thinking if I should add Sing Tel ad it already one of the top 3 in my portfolio,, I may add bank stocks if STI continues to drop.. Cheers :D

      Delete
  3. Thanks ! I will buy regularly at each 50 point fall and started this week at 3050. I have a predetermined watchlist with buy price ranges and will buy if that is achieved. For every 100 point fall below this level, we should progressively deploy more capital. Eg- buy for 5000 dollars now, 10000 next fall, 15-20000, next etc like a pyramid ! Of course this is plan but whether I can stick to it with discipline needs to be seen!!

    ReplyDelete
    Replies
    1. Wow ! Sounds good to have a more discipline way of deploying war chest.. Hope u could buy more value stocks when price drops further. That's where we see the values .
      Cheers :D

      Delete

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