Sunday, 30 August 2015

Will Recent Correction turns into a Bear Market?

According to Euro Pacific Capital CEO Peter Schiff, rising interest rates is the main driver behind the selloff.

"People want to blame it on China, but it's not about China. The U.S. market was falling before the Chinese slight devaluation," Schiff said.



"There has been a lot of technical damage done, and if the Fed isn't going to come out and come clean about the fact that it's not raising rates, I think this correction will turn into a bear market," he added.

There is no strong catalyst for the bear to appear. In my opinions, these could be the trigger points :

1) Oil countries/companies start to run into bankruptcy due to persistent low oil prices

2) Fed going ahead with interest rate rise and the percentage of rising given a shock to the world

3) China's stock investors panic selling causing the stock market to crush

4) something sudden happened unfortunately (example, war, virus)

Do you think current correction will turns into a bear market? Why?





6 comments:

  1. PAP lost this election. Market crash big time?

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    1. Hi CW

      If PAP lose 50% of the seat, possible.

      However, I doubt PAP will lost this election big time. If they lose 2 GRCs is already quite a headline. I am only thankful for the free Public Holiday on that Friday. haha.

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  2. Hi FD,

    If the market is already in turmoil like now, I do not think the trigger points makes lots of sense. Market is irrational.

    Why do not u instead think, there isn't any good trigger points to prevent a bear... hahaha

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    Replies
    1. Hi Rolf

      To prevent a bear market, I suspect we need natural catalyst to provide strong confidence in the economy without the need of QE giving "fake" stimulation. People will always think the economy is sick and temporary well because of the QE. Once you stopped the medicine, people will be shaken again. Need to assure people that the economy can do well without medicine.

      However, up-and-down is a natural cycle of market. If it only goes up, then it is a no-brainer. Everyone will be stock prodigy.

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  3. To me, it is already a bear market. The stage is already set. It is just to many people, they don't know how to see it, or do not wish to believe it. The question is only when the real tumble comes.
    Don't be the last to hold the hot potato.

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    Replies
    1. Hi Gideon

      Thanks for visiting my humble blog. Nice trading analysis you have in your blog.

      For most non-active investors, it will be better not to throw away the hot potato now. The question is, are they prepared for it? This is where asset allocation is important. If the person is already wearing a thick glove, the hot potato on hand is tasty instead of giving to others to eat. :)

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