Dow Hit a New High

I think Dow hit a new high yesterday. I'm still feeling very uncomfortable because of contradictory evidences that I have seen. I like this piece written by John Hussman. It's a long article but I will just extract the charts for you. For more details, please visit http://hussmanfunds.com/wmc/wmc120326.htm. He has done a great job to refute some of the popular beliefs.

Evidence #1: Valuation wise, we are no where near a secular bull market. His valuation model says the return of the next 10 year is only 4%. Sucks!!!!!



Evidence #2 : The stock is cheap. Yeah but profit is seems to be out of norm. Reversal to mean will make stock valuation expensive.



Evidence # 3: The consumers are doing fine. How would they are doing fine if wages disbursement have not shown any improvement?



Evidence # 4: "The Fed is creating huge amounts of money, and all of that money has to go somewhere."

My comment on evidence # 4: Probably Keynes is correct. We are all dead in the long run. Things are absolutely not making sense to me empirically but what can I do? The bloody Fed force everybody to spend and borrow. 

SPEND!!!!!! and BORROW!!!!!!

They export the similar model to the rest of the world as well. Trichet was making a comment of what he called behavioural contagion. His successor Daghi seems to prescribed the exact same medicine. (http://globaleconomicanalysis.blogspot.com/2012/03/trichet-warns-of-behavioral-contagion.html)

This kind of investment environment is absolutely disastrous. You can get caught at the wrong end very easily.

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Market Watch

The biggest news of this week was 

BEIJING (Dow Jones)--The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to 48.1 in March compared with a final reading of 49.6 in February, HSBC Holdings PLC said Thursday.

The fall in the PMI could exacerbate market concerns over a slowdown in the world's second-largest economy amid weak exports and a declining domestic property market.

http://online.wsj.com/article/BT-CO-20120321-718449.html

Whatever equities sold off were short lived. Bulls are still in control. It would need a few more bad news to make a small leeway for bears to march an inch forward.

On the local front, it's all dominated by the local fund managers. Retail participation were still healthy but foreign participation were tepid. This trend may continue all the way to general elections.

One of the indicators that I followed closely: The US weekly leading indicator seems to keep ticking up.

The lagging data such as job data seems to be doing fine too.

Bottom line: top down is seems to make some sense but bottom up i.e. stock picking seems to be getting more difficult. 

A little bit of diversion. It's about women in senior management

Go here if you are interested: http://www.gt.com.my/press_release_8Mac2012.html

I am happy to see Malaysia to be in the top 10 economies with highest women participation in senior management. It's quite surprise that emerging economies have more women in senior management positions as opposed to advanced economies. 

At first I thought it has more to do with trust. From my personal experience, I find that it is easier to trust women managers than men in these emerging economies. I have seen when life is hard especially in the Philippines, Thailand, China, Vietnam, etc, I find that women have stronger motivation to do well for the sake of their family. The fact they don't spend time on golf course or karaoke will enable them to focus more on works than being swayed into wrong directions. They are also more meticulous when come to compliance and more ready to blow whistle whenever they feel uncomfortable.

In my professional life, I was/have been lucky to work with a few of them who are truly smart, dedicated, high level of integrity and upholding high level of professionalism. I just want to make a public acknowledgement of their contributions. Thank you!!!

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