Investment Commentary from my Financial Advisor

By Paul on May 20th, 2009

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I’ve just received an email from my financial advisor about “Shoots Topping Out”. I’ve uploaded the investment commentary in my usual shared folder for everyone but here’s a direct link.

Funny that it comes after I just made the switch back into China Funds.

This is what was mentioned:

We view as such that it is unlikely that this rally is towards recovery. We do not know what the future is but base on fundamentals, economic indicators and technical analysis, the probability of a recovery is about 20%. Bear rally can be very convincing (or confusing) as market could possibly shoot up by 50% (as in year 1998) leading many to rush into the market with the illusion of a recovery. In that year, STI fell to a new low around 800 level after the bear rally reached its peak.

It is advised to rebalance your portfolio and shave some holdings. However, avoid taking a ALL OR NOTHING APPROACH as that 20% probability of a recovery could surprise us!

For a while, I am relieved that my deduction in my last post is sorta in line with my financial advisor for the view of China. The talk on STI is a little scary but I am not concentrating on this market as yet as I would prefer the clearing of the long term downtrend line first. If what was said is true about this being a bear rally, then I look to the 200MA for support and would prefer to stay clear if it breaks that level. To me, it’s too late to get into STI cos it is near resistance.

For the faint hearted and long term investors, RSP would be the best option. That’s my plan for now.

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