hi PB. i think we are getting a correction but structurally i think the markets look pretty stable.
re Shanghai market ...
1997-2006 a huge bottom established at the 1000 level
2000-2015 peaks and bottoms at the 2000 level have established a massive base.
we have 35 per cent of our wealth in this market and this is my Sir John Templeton trade. at times i may need to put on some hedging but the aim is to basically keep the position until the valuation of the chinese market is three times that of the american stock markets. when the S&P starts its next bear market, it will affect all markets but i expect the chinese market to soon go on to new highs much like the japanese market did after the US 1987 crash.
when i look at the OBV of the shcomp over the last three months, i see nothing to cause me any concern. i think i am being completely rational to be bullish.
re S&P ....
what a massive bull market! i can remember our 1987 top and the emotional pull of the market in the week before the top. and i can remember the emotional pull of the Nasdaq top in 2000 whatever. the stockbroker was trying to interest me to buy Cisco and i had to lash myself to my chair to resist the siren song.
at the moment i feel nothing like this.
also the big punters, who know little about markets, tend to lose heavily by shorting the market about one year before the peak. i'm thinking of Alan Wood losing 100mn and someone i personally knew in 1986 who lost a huge amount. i know what a 20 lot feels like but this guy was dealing in 500 lots.
remember US companies are bringing back 3 trillion usd to the US.
so where is the top of the S&P? i think one should think about these matters using complexity theory. there is nothing determinate about market tops. but at a guess i would expect it before the end of the decade, probably in the second have of next year at about the 3700 level. who know? i certainly don't.
shorting markets is a skill that requires a lot of practice. a market could fall down through to China and most people couldn't make a buck. i have accounts in place so that when the S&P does top out, i will recognize it, i will short it and i will be successful. and that is not an idle boast. i expect nothing less of myself and it is written in the wind.
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