Posted by: Babu Suresh | August 26, 2009

Chinese Syndrome and Stock Markets

Do I need to be either an MBA or Economics graduate from, Harvard or Yale or Princeton or Stanford Universities or Indian IIM to become eligible for a money manager or to be a market and technical analyst?

I am profoundly happy and am immensely thankful for I am just a school drop out and am proud to note I am better off in my market, technical as well as economic analysis and a good coach compared to those from the above mentioned places. Yes, I fully agree, with a title from the afore mentioned universities and institutions, one can easily and freely play with others’ money, sitting under the big names, giving all possible and non-existing excuses for not being able to make profit for their clients nor return the principle, hiding the fact they are unfit to do the job they have been entrusted with.

At present, in the absence of any genuine catastrophic events such as the ones that occurred last Oct., the media, the learned economists and the analysts started using Chinese syndrome, in other words sending a desperate warning that they want a huge correction in the market, because they missed the bus all the way along since they were too busy doing their analysis and spending their time talking with the fourth estate. A good correction is any way due now, that even a school boy or girl when he/she looks at any of the markets’ charts, would tell is imminent; it does not require a title from either Harvard or Yale or Princeton or Stanford Universities or Indian IIM.

DJIA_July_09It’s a total disgrace to note, esp. from the mighty US, the noise is becoming much stronger holding the Chinese market as a cause for the recent global markets rise and fall. It’s highly regrettable they forgot their own history, their strengths, weaknesses and their good deeds and the bad ones as well. The fact of the matter is, it’s pathetically evident that the noise is much louder from those pessimists who both didn’t want the markets recovering as well as economies returning to normalcy. It’s noteworthy to mention, although I don’t have the particular press link to share with you, in 2006 a trader from US made a statement in the press, during a long public holiday in US that no one would dare push Gold price up when the American markets are on holiday. Although I felt sad at that time to read that news, I wish to know where is that spirit now? For the sake of argument, if the Indian Govt. decides to ban marriages for 2 years to control the population and improve the economy, the Gold will crash to god knows to what level. lol

China_SSE_July_09In 2008, when for the first time Chinese market crashed and the whole global markets reacted on that day, I told one of my friends, Americans would not allow their markets to follow suit Chinese market, primarily because it’s a great prestige issue for them. Now I regret I made a wrong assessment about the Americans, for some of them helped happily destroying the livelihood of their own people for their mean and selfishness.

I last posted my analysis on Dow Jones Industrial Avg. Index on 1oth Mar. 09. I felt this is the most appropriate time to revisit that analysis and put forward my views on the next phase of the markets.

The fundamental difference between 1930s and 2008 market fall and economic depression is, at that time there was no technology that exist now nor there were people in the forth estate well determined, spiritless and committed to create and spread fear, chaos, anxiety, mental depression using ultra modern, indescribable languages just to satisfy few big shots.

Thanks to all the events happened in 2008, all the major markets across the globe have started realizing their own strengths and weaknesses and their past mistakes, although still the old habits persist, in due course the true meaning of inter-dependence will take precedence to total dependence on one market and one economy. A classic change that is happening in Indian Market for instance since March, 2009; the whole of the market has been under the control of the local institutions contrary to the popular belief the market BSE_Sensex_July_09has been going up due to FIIs. The most feared and revered weekly crude oil inventory data from US has now become a misnomer. No one seems to care a damn about that data except of course the most inevitable media.

A new and invisible discipline is forming and taking shape in all the markets thanks again to Oct.2008. It’s true, all the markets have gone up very fast, taking into account good corporate results and discounting all the positive developments that are yet to take shape, creating an acceptable fear whether there is one more bubble burst about to happen. Even in the event of a major correction, I would expect at least 10 to 15% to create a cushioning for the next quarter results and other economic developments but, it will not be due to Chinese market’s behaviour.

Healthy And Wealthy Trading



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