A Path to Forever Financial Freedom
8 Signs We Are In A Bullish Environment
Stock market worldwide has been enjoying a good year in 2017 so far and seems like it will trigger investor's happy come Dec later this year.
It is quite clear that we are rather in a bullish environment, at least from the sentiments point of view when we see how stock markets perform globally.
I'm going to throw randomly 8 signs that I see recently that substantiates why I feel we are in this bullish sentiment. I will try to make it a mix in between technical and layman (for fun) so it won't get so boring, like what an economist does.
1.) Good News Bad News.... All Green
This is when regardless of how the company is performing, good or bad, the share price goes one way up and that is green in color.
The most recent example would be starhub which reports a 20% loss in nopat year on year with distinguish falling ARPU but share price went to close green the following day.
Some of us may argue that it might have been priced in but think again. Really? If we are in a bearish environment, would it likely close green upon reporting a poor result?
2.) Companies went XD but share price goes up
The most common case that we've seen is companies' share price tend to go up during Cum-Dividend (CD) and will temporarily drops the following day upon XD.
The recent case of ST Engineering and Ascendas Reit prove otherwise nevertheless. Upon going XD ,on the following day, the share price returns back to its original price when they are still in CD mode. Wah, so bullish indeed!!!
3.) Number of Gurus have increased
During a bullish environment, there are increasingly many gurus who provide courses on how to make XX% returns in a year with ease by following their "system".
There are correspondingly many followers who follow whatever the guru says because everything has been "perfect" so far.
4.) Self-ego elevated
This is when making money seems easier than learning ABC and absolutely no fret on extrapolating these returns to many future years to come because no one actually realize how easy it is to become a millionaire in Singapore after all!!!
Ah ha!! To top it all off, perhaps we don't even need to work after all. Making money to work for us is so much easier than working for money. Time to write that resignation letter perhaps...
5.) Media Reporting Happy News
You read news in cnn and cnbc that market is breaking new high and only going to go higher.
Economy index like Manufacturing, PMI, ISN are all turning better and Fed likely to tighten the interest rates because of the better performing economy and low unemployment rate.
Analysts started touting higher valuation target price for companies, which is in stark contrast to what they call 12 months ago.
6.) Taxi Driver Selling Options
I've recently took a cab during the last weekend and talked with a driver who is supplementing his income by selling an options.
Now, I'm not exactly an expert in these derivatives but if I understand correctly from him, he is trying to sell a put options and if price continues to go up, he'll earn that premium in between.
I think this is a rather popular strategy among some of my circle of friends too.
7.) Shiller Index Topping High
This is going a bit more technical here.
Rober Shiller is well known for his model that he creates on the cyclically adjusted S&P P/E ratio.
Apparently, the only time it was screaming that high was during the great crash in 1929 and the Dot com bubble in 2000. Nothing else came close to that other than what we are experiencing today.
Still, it's not a perfect model but up to individual to ponder and think about.
8.) VIX index Bottoming Low
The VIX index is a volatility index which basically tells us how complacent the market is (if you ask me to explain that in a layman term).
The only time it went down below 10 is during the Dec 1993 incident, and the peak of the bull in 2007. Other than that, they have hardly gone below 10.
Conclusion
Look, the market is not going to crash tomorrow (oops, I better stop preaching like some kind of guru or fortune teller). In fact, the bullish environment may happen a lot longer than what most people think.
Now, the only think I haven't done is probably to head down to Mandai road, spot a few family members of Ah Meng and try to ask them to throw some darts and see where it ends up.
Hmm, anything I have missed so far?
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CS Tan
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
