PETALING JAYA: The recent upswing in the stock market shows that confidence has improved for both local and foreign investors, according to Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff.
He said the confidence was due to some encouraging stimulants such as the liberalisation of the local financial sector as well as signs of stability in the US markets.
"The current market condition offers a good opportunity for investors to invest in fundamentally good stocks with attractive valuations," he said in an email reply to StarBiz.
Some fund managers contacted confirmed that they had been bargain hunting while there were others who had taken the opportunity to trim down their holdings.
Teoh Kok Lin, managing director of Singular Asset Management Sdn Bhd, said the fund management company was bargain hunting, particularly in the Chinese and Indonesian markets, given the attractive valuations.
"In Asia, the banking and financial system is healthy, plus Asian policy-makers are making good moves in lowering interest rates and increasing fiscal spending to revive their respective economy," he said.
Kumpulan Sentiase Cemerlang Sdn Bhd had also increased its weightings in the market due to the improved market sentiment, said fund manager Choong Khuat Hock.
"There are signs that the economy is bottoming although there is no clear sign yet of a recovery," he said.
Fortress Capital Asset Management (M) Sdn Bhd, meanwhile, indicated that it had reduced holdings in certain stocks given that valuations had become expensive due to the rally.
"We've started to trim down positions this week as some of the stocks in the portfolio, including offshore investments, have risen sharply. We think first-quarter results would not show recovery yet and there might be some profit-taking," said chief executive officer Thomas Yong.
While sentiment has improved significantly, financial performance in the first-half year is unlikely to be outperform. "People can tell that we've seen the worst and, even if we haven't recovered in the second half, we can still stomach it," Yong said.
Sellers were lacking at the current market levels, making it unattractive with blue chips seen as expensive compared with regional heavyweights, he said, adding: "The Malaysian market is likely to be flattish for a while and if it's stuck at present levels, the smaller-cap stocks might see some activities," Yong said.
Aberdeen Asset Management managing director Gerald Ambrose said the current market conditions were not one "to chase stocks."
"It's difficult to say where the market direction is as a lot of events can change sentiment quite quickly. We were doing more topping up and until recently top slice some stocks. We tend to be conservative," he said.
Nonetheless, there were still high-quality companies worth looking at and Aberdeen was watching the stocks' performance, Ambrose added.
Our Top Stock-Market Signal Says "Buy"
He said the confidence was due to some encouraging stimulants such as the liberalisation of the local financial sector as well as signs of stability in the US markets.
"The current market condition offers a good opportunity for investors to invest in fundamentally good stocks with attractive valuations," he said in an email reply to StarBiz.
Some fund managers contacted confirmed that they had been bargain hunting while there were others who had taken the opportunity to trim down their holdings.
Teoh Kok Lin, managing director of Singular Asset Management Sdn Bhd, said the fund management company was bargain hunting, particularly in the Chinese and Indonesian markets, given the attractive valuations.
"In Asia, the banking and financial system is healthy, plus Asian policy-makers are making good moves in lowering interest rates and increasing fiscal spending to revive their respective economy," he said.
Kumpulan Sentiase Cemerlang Sdn Bhd had also increased its weightings in the market due to the improved market sentiment, said fund manager Choong Khuat Hock.
"There are signs that the economy is bottoming although there is no clear sign yet of a recovery," he said.
Fortress Capital Asset Management (M) Sdn Bhd, meanwhile, indicated that it had reduced holdings in certain stocks given that valuations had become expensive due to the rally.
"We've started to trim down positions this week as some of the stocks in the portfolio, including offshore investments, have risen sharply. We think first-quarter results would not show recovery yet and there might be some profit-taking," said chief executive officer Thomas Yong.
While sentiment has improved significantly, financial performance in the first-half year is unlikely to be outperform. "People can tell that we've seen the worst and, even if we haven't recovered in the second half, we can still stomach it," Yong said.
Sellers were lacking at the current market levels, making it unattractive with blue chips seen as expensive compared with regional heavyweights, he said, adding: "The Malaysian market is likely to be flattish for a while and if it's stuck at present levels, the smaller-cap stocks might see some activities," Yong said.
Aberdeen Asset Management managing director Gerald Ambrose said the current market conditions were not one "to chase stocks."
"It's difficult to say where the market direction is as a lot of events can change sentiment quite quickly. We were doing more topping up and until recently top slice some stocks. We tend to be conservative," he said.
Nonetheless, there were still high-quality companies worth looking at and Aberdeen was watching the stocks' performance, Ambrose added.
Our Top Stock-Market Signal Says "Buy"
Get ready. Our top stock market signal is just about to flash a "buy."
And this is big news because going back to the 1920s, this signal's track record is fantastic...
In fact, the last time this signal flashed was December 2007. Back then it said "GET OUT OF STOCKS." It hasn't wavered since... The signal has stood its ground, saying "stay out of stocks," since 2007. Don't you wish you had paid attention to it?
Here's the secret to the market-beating success of this signal: It has a history of keeping you out of the big downturns in stock prices. The signal captures most of the uptrend as well.
Let me share this signal's incredible track record. Our "baseline" is the overall stock market � the S&P 500 Index. This index has compounded at 5% a year since 1926, not including dividends. (Yes, it's true... Most people think the stock market has done better than that. But the recent bear market reduced the historical return.)
When the signal said "be in stocks" � two-thirds of the time � stocks rose at a compound rate of 11% per year (again, not including dividends).
The other third of the time, when the signal said "be OUT of stocks," stocks actually compounded at a negative 6% per year.
This incredibly simple idea comes down to one question: Are stocks above or below their recent average prices?
If stocks are above their recent average, then you want to own them. If they're below it, then you don't want to own them.
When the S&P 500 Index is above its 45-week moving average, stocks compound at an astounding 11% annual rate. And when stocks are below it, they lose money at 6% per year.
Here's a simple graph showing how much money you'd have made since the beginning of 2000 following this system, versus the index. We own stocks above the moving average and move to cash earning 3% (just to keep the math easy) when stocks are below the moving average.
The blue line is the money in our little "system." You're in cash when the blue line goes "straight." The black line is your money if you just held the market (not including dividends).
You can see a few things right away...
The first is, you did significantly better than buy and hold. Most importantly, you cut your losses in the two big falls � the one from 2000 to 2003 and the one from 2007 to today.
With results like these, why doesn't everyone simply own stocks when they're above the line?
Before I go on... there is one small issue here that can eat into your returns... something called "whipsaws." That's when the market crosses over the line one week and then crosses back the next week. The argument goes that the transaction costs associated with jumping in and out on these false signals would eat up your excess gains.
This worry has merit, but you can nearly get rid of whipsaws quite easily by increasing the threshold it takes to get into a trade. When you raise the threshold to enter the trade to 2% above the moving average, you cut the whipsaws down by over 80%.
And even though you've made it tougher to get into a trade, the amazing part is, you don't affect your results much. In this example, not only would you have ended up with more money, but you'd have had far fewer transactions, meaning lower costs.
You might disagree with this system. You might say it's too simple or dumb. But it's worked darn well over the last 80 years... and over the last decade.
And right now, this signal is about to say "buy" � because the old high data points are about to drop out of the 45-week average, and low ones will replace them.
Remember, when it says "buy" stocks rise at 11%+ a year... Ignore it at your own risk.
And this is big news because going back to the 1920s, this signal's track record is fantastic...
In fact, the last time this signal flashed was December 2007. Back then it said "GET OUT OF STOCKS." It hasn't wavered since... The signal has stood its ground, saying "stay out of stocks," since 2007. Don't you wish you had paid attention to it?
Here's the secret to the market-beating success of this signal: It has a history of keeping you out of the big downturns in stock prices. The signal captures most of the uptrend as well.
Let me share this signal's incredible track record. Our "baseline" is the overall stock market � the S&P 500 Index. This index has compounded at 5% a year since 1926, not including dividends. (Yes, it's true... Most people think the stock market has done better than that. But the recent bear market reduced the historical return.)
When the signal said "be in stocks" � two-thirds of the time � stocks rose at a compound rate of 11% per year (again, not including dividends).
The other third of the time, when the signal said "be OUT of stocks," stocks actually compounded at a negative 6% per year.
This incredibly simple idea comes down to one question: Are stocks above or below their recent average prices?
If stocks are above their recent average, then you want to own them. If they're below it, then you don't want to own them.
When the S&P 500 Index is above its 45-week moving average, stocks compound at an astounding 11% annual rate. And when stocks are below it, they lose money at 6% per year.
Here's a simple graph showing how much money you'd have made since the beginning of 2000 following this system, versus the index. We own stocks above the moving average and move to cash earning 3% (just to keep the math easy) when stocks are below the moving average.
The blue line is the money in our little "system." You're in cash when the blue line goes "straight." The black line is your money if you just held the market (not including dividends).
You can see a few things right away...
The first is, you did significantly better than buy and hold. Most importantly, you cut your losses in the two big falls � the one from 2000 to 2003 and the one from 2007 to today.
With results like these, why doesn't everyone simply own stocks when they're above the line?
Before I go on... there is one small issue here that can eat into your returns... something called "whipsaws." That's when the market crosses over the line one week and then crosses back the next week. The argument goes that the transaction costs associated with jumping in and out on these false signals would eat up your excess gains.
This worry has merit, but you can nearly get rid of whipsaws quite easily by increasing the threshold it takes to get into a trade. When you raise the threshold to enter the trade to 2% above the moving average, you cut the whipsaws down by over 80%.
And even though you've made it tougher to get into a trade, the amazing part is, you don't affect your results much. In this example, not only would you have ended up with more money, but you'd have had far fewer transactions, meaning lower costs.
You might disagree with this system. You might say it's too simple or dumb. But it's worked darn well over the last 80 years... and over the last decade.
And right now, this signal is about to say "buy" � because the old high data points are about to drop out of the 45-week average, and low ones will replace them.
Remember, when it says "buy" stocks rise at 11%+ a year... Ignore it at your own risk.
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