Saturday, August 25, 2012

where is the market trending?

I was terrified when I took a closer look at my portfolio. Some of my winning positions have sank into the red or have seen their margins diminish. For instance, Etika, which now forms more than 20% of my portfolio is down 13%. Their share price has failed to gain any strength since going ex-bonus one year ago.

I would like to dip my hand in the market but there are things holding me back. Firstly, I am in the process of selecting a flat from the HDB, and I will need to increase my reserves significantly. Also, in the short term, I have to save up to pay for my Masters programmer of which I just started.

But the main reason holding me back from adding any more cash is that the market does not seem to be heading anywhere. Perhaps, as a child of the 2007-8 crisis and 2009 recovery, I am used to seeing very low valuations for good companies.

Let us agree that company fundamentals and broader market conditions matter, both feeding into each other and thus driving market expectations. Based on those points, we are not clear on what we should see. One the one hand, companies are seeing a recovery in their top and bottom line. On the hand, both the developed and emerging economies are heading for an economic slowdown. Any recovery seems fragile, hinging on how Europe gets out of its debt crisis.

Maybe as a result of having more responsibilities or as a side effect of ageing, I feel more gloomy. I think that it is a possibility that we will be in a multi-year recession (despite it being Obama's re-election year) just that we are not able to see it tile we are much deeper into it. I hope I am wrong.

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