Animal spirits

Keynesian animal spirits

The financial markets and news on the Internet nowadays are more of gossip and entertainment rather than well rooted to any fundamentals nowadays. From yield curve to trade wars and North Korea reconciliation and overheated china economy, the average investor is simply drowned in a sea of information where most news don't make sense or point you to a defined direction.

I see the value of bottom up analysis for traditional fundamental analysis. Annual reports are not particularly exciting, but it will keep you occupied for a buy and hold strategy, and also give you data and numbers that are most likely reasonably accurate, and a growth story defined by the chairperson. If I have doubts in even this basic assumption, I should not consider the company no matter how attractive they may appear.

Market sentiment is another jungle altogether with its exciting and colourful vocabulary. Take for example.

Central bank policy
Doves (laissez-faire) and hawks (close scrutiny of economy)
Bulls (growth) and bears (corrections)
Turtles (buy and hold)  and Jaguars (nimble trend chasers)

What is the Central Banks stand? What does the smart money and independent influencers say?

Goldilocks and the three bears
Pretty much what Ravi menon indicated came to fruition in a way. If you don't predict the market but stick to the facts, you will be right. The facts still stick regardless of what the others think. You are not right or wrong because the market thinks otherwise. You are right because your facts are accurate and your reasoning is sound. Mr market can be irrational in the short run and there is no way to prove that others are right or wrong.

https://www.google.com.sg/amp/s/www.businesstimes.com.sg/government-economy/mas-chief-sounds-caution-over-goldilocks-economy-and-its-three-bears%3famp?espv=1

What is my market outlook now? Is this correction a teddy bear or a grizzly bear?

It is very hard to identify whether the recent corrections are teddy bears or grizzly bears. There is so much noise in the market that it is hard to separate fact from fiction. 

Buying on dips (small cuddly bear) may feel good. But it will take true strength of character to buy continuously into a giant grizzly bear and hold it out. 

I believe I am not much of a jaguar (nimble trader)  so I will be turtling out the recent correction and staying sufficiently vested until the real grizzly bear emerges its head. Until the companies I understand start to present strong bottom up performance numbers, I prefer to stay more in cash and build up my warchest. Now is the time for disciplined accumulation rather than half hearted purchases.

Not selling yet until everything is red and rosy. Not buying yet until there is blood on the street.

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