Interesting time to reflect
August 2nd 2007 10:16
Yesterday the Australian sharemarket experienced the biggest single day fall in 6 years and at the end of today's closing, the market clawed back, thanks to a last minute US market upsurge and the bargain hunters pouncing on the advantage of oversold prices.
Indeed, we are going through yet again another interesting time for the mechanism of demand and supply, and the market itself. Any finance students and researchers will take on the current situation with a curious eye trying to understand the cause and effect, market timing, or simply the rationality of it in order to make sense out of the unexpected surge and fall at the blink of an eye, figuratively speaking.
The ASX S&P 200 index closed on Thursday higher by 1.19% while it loss 3.3% yesterday, the lowest since September 11 in 2001.
For the time being the bulls and bears will be crossing swords with each other attempting to gain dominance and so in other words, as it has been mentioned several times on this site, more volatility to come but with the side advantage given to upside.
FP Trading Desk, drawing on the view of RBC Capital Markets strategist Myles Zyblock, reports on the marker overview:
Higher volatility is expected to drive the cost of capital up further and hit equities initially, but any downside from here should be temporary,...
[...]
However, while he continues to prefer stocks over bonds, he suggests buying portfolio insurance. Another recommendation he makes is to adjust equity portfolios by boosting exposure to quality names, as well as stable growth and dividend plays.
While we are at rocky times, it is good to reflect on our analysis, trading strategies, hyptheses and risk management, and most important of all, take the current situation as learning another aspect of the "Art" of the market. Simply because financial markets don't work on the mechanics of science, otherwise, the whole idea of an active and liquid market will cease to exist.
Indeed, we are going through yet again another interesting time for the mechanism of demand and supply, and the market itself. Any finance students and researchers will take on the current situation with a curious eye trying to understand the cause and effect, market timing, or simply the rationality of it in order to make sense out of the unexpected surge and fall at the blink of an eye, figuratively speaking.
The ASX S&P 200 index closed on Thursday higher by 1.19% while it loss 3.3% yesterday, the lowest since September 11 in 2001.
For the time being the bulls and bears will be crossing swords with each other attempting to gain dominance and so in other words, as it has been mentioned several times on this site, more volatility to come but with the side advantage given to upside.
FP Trading Desk, drawing on the view of RBC Capital Markets strategist Myles Zyblock, reports on the marker overview:
Higher volatility is expected to drive the cost of capital up further and hit equities initially, but any downside from here should be temporary,...
[...]
However, while he continues to prefer stocks over bonds, he suggests buying portfolio insurance. Another recommendation he makes is to adjust equity portfolios by boosting exposure to quality names, as well as stable growth and dividend plays.
While we are at rocky times, it is good to reflect on our analysis, trading strategies, hyptheses and risk management, and most important of all, take the current situation as learning another aspect of the "Art" of the market. Simply because financial markets don't work on the mechanics of science, otherwise, the whole idea of an active and liquid market will cease to exist.
| 33 |
| Vote |
subscribe to this blog