Since Not Last Year, Therefore This Year?
Cho Sing Kum
3rd
Feb 2003
The Westerners like to make their
yearly outlook at the beginning of the Western New Year. The Chinese
like to make their yearly outlook at the beginning of the Chinese New
Year. Both stem from the need of the public to want to know what's ahead.
This is forecasting and is of no use as inputs to decision making in the
market place. On the contrary, it may wreck your year.
I have been approached many times in my trading career with questions
like:
"What do you think of the dollar this year?"
"Where do you think the dollar will be next month?"
"Where do you think the dollar will be three months from now?"
"Do you think the Dow will reach xxxxx by middle of the year?"
"Where do you think the Dow will be by year end?"
Can this type of questions be answered? It depends. If you are the
practical and realistic type, that you are practical and realistic
because life has taught you to be so, then the answer is "No". But try
answering these questions with "No" and you will be chastised.
"What!!! Your charts can't even tell you this?"
"We hire the wrong guy!"
"You can't even make a simple forecast?"
"You don't even know where the dollar will be by month end?"
"Just give me a forecast. Doesn't matter whether it is going to be right
or wrong."
If answers can be found, there is one thing I won't need to do. I won't
need to bother about risk management... just whack everything I have
into that position... because by month end, by middle of the year, by
end of the year, the market WILL BE AT xxxxxx and I will be RICH!
Back to some sane thoughts. Everyone is talking about an economic
recovery in Singapore when the US economy recovers in the second half of this year. Last year
the economists forecasted a recovery in the second half of
last year. Id did not happen. So this year the story is the same; an economic recovery in the
second half of this year. I think the Japanese may have been
doing something like this every year about their economy for the last 13
years.
I don't know whether any of you can show me a chart where after a strong
prolonged bull market that lasted at least a few years, no make that ten
years, no make that 15 years, hit top and bust, to be followed by
another immediately strong rally to an even newer high. I don't know
whether such a chart exist. If you can find one, I would like to study
it and change my mind. If you cannot, I don't know when the US economy,
hence our economy, will recover. It would certainly spell trouble if a
US Presidential Election year 2004 came and went without a rally.
I am going to show you what I mean with a comparison chart and you are
not going to like me. But spend a few moment to understand the market
action.
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