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Ahead of the Curve provides analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity, and FOREX markets are discussed. Rajveer Rawlin is a PhD and received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher, having followed capital markets in the US and India since 1993. His research interests include capital markets, banking, investment analysis, and portfolio management, and he has over 20 years of experience in the above areas, covering the US and Indian markets. He has several publications in the above areas. He currently teaches business and management students at CHRIST University. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Wednesday, 11 April 2018

Stock Market - The Good, The Bad and The Ugly


The good first:

The market seems to be holding the 200 DMA despite excessive bearishness and negative vibes surrounding the trade war with China and the special counsel investigation involving president Trump:

spx 200 dma

The bad:
Valuations are still in the stratosphere and market volatility is on the rise:
spx Q ratio

Chart courtesy Jill Mislinski via Advisor Perspectives

spx vix chart


The ugly:
If the market where to break support here near the 200 DMA there is loads of downside ahead and parallels to earlier market melt downs are well worth watching:

spx comparison

Chart courtesy David Rosenberg:

stock market good bad and ugly
Image from imdb.com
Posted by at stock market views
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Cash - 40%
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Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.