Archive for November, 2018

After two exhausting months…one is really starting for the Santa Claus Rally.

If it does appear – and I believe in Santa) two dates are important.

A) 1st December – meeting President Trump – President Xi – a mildly positive statement (like freezing of tariffs) would be a positive for the market triggering some short covering.

The China issues is a the only constant in Trump’s life. Since the 1990s he has identified (correctly) China as an issue for US world dominance. Even so, he is pragmatic and listen to his voter -base. Plus always looks at the market as a vote on his Presidency. He could well take a pause.

19th December – The last meeting of the year of the FED will be followed by a release statement for 2019 rates hike. A hint of a dovish take (less than the 3-4 rates hikes in the FED forecast) would definitely spur a rally.

Already 2 of the members of the FED declared that the interest rates are close to neutral for the FED and the FED is aware of the global slowdown and end of the tax -relief growth spur.

Let’s wish Santa to come!

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The 15th October I told the clients that we would have issues – even telling them that we could see the low of February.

Unfortunately I was right, even if I hoped for a V style correction – now it is almost certain will be W style.

This correction is doing a lot of damage. When it will finish? Good question Рmost probably end of November Рwhere Trump-Xi probably will agree to an armistice  in the trade wars.

Unfortunately we are at the edge of the end. Usually the market bull ends in a sharp correction (now, than a sharp bounce and then the end. Probably by Q2 2019 (March-May 2019).

Bear market does not mean a Global Financial Crisis 2 – that was a systemic failure.

An average Bear market last 13 months and it is defined by top to bottom loss of over 20%. Usually the market than recovers in two to three years.

The best way to address a bear market is

  • Not panic
  • Diversification
  • Cash aside to buy good companies at great price