Here are this week's investing and economic insights:
#MarketTrends
Unlocking Stock Market Secrets: 60 Years of Bull vs. Bear Drama!
In the current unique stock market scenario, the S&P 500 has surged 24%, coexisting with robust economic growth and rising interest rates.
Despite a 3.7% unemployment rate and moderated inflation, this cycle appears distinct. Over the last 60 years, bear markets averaged -34.2% in 11.1 months, contrasting with bull markets at +151.6% in 51 months.
Historical data reveals the impact of inflation-triggered recessions on market cycles. Investors can prepare for bear markets through diversified sector investments, incorporating bonds for stability, and exploring international stocks for reduced correlation with U.S. equities.
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The Insight: How To Find The Opportunities
Capitalize on the potential in cyclical sectors like tech during upswings.
Mitigate risk with diversified asset classes, including bonds for stable cash flows.
Explore international stocks to buffer losses during U.S. market downturns.
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#QuoteOfTheWeek
“Buy low, sell high. It’s pretty simple. The problem is knowing what’s low and what’s high.”
- Jim Rogers
This quote acknowledges the difficulty of timing the market and finding the optimal entry and exit points. Investors should not rely on luck or intuition, but on rational and objective criteria to determine the fair value of a stock.
#What is happening this week?
ASX 200 Crashes in Worst Start Since 2007!
The ASX 200 experienced a 1.3% decline in the first week of 2024, marking its weakest beginning since 2007.
The broad market rally observed in the final months of 2023 lost steam, affecting various sectors, with Technology and Real Estate witnessing significant drops of 5.1% and 3.4%, respectively.
On a positive note, Energy (+1.1%) and Utilities (+0.2%) managed to end the week with gains. The Australian dollar also closed lower at US 67.13c.
The One Thing That Could Derail the Global Market Rally in 2024
Globally, equity markets started the year on a subdued note. The previous optimism from the impressive December 2023 rally diminished as US Treasury yields rose, and expectations of early rate cuts from the Fed and European Central Bank were scaled back.
Despite a robust US job market report, conflicting economic data created uncertainties, especially with businesses hiring rapidly, putting pressure on employers to increase wages.
Maersk Stops Shipping Through Red Sea After Attacks
Maersk has halted shipping through the Red Sea indefinitely following recent attacks. Continued incidents targeting container ships in this area may have significant repercussions on worldwide supply chains and the economy.
This could lead to disruptions as ships are compelled to opt for alternative routes or face elevated insurance expenses, ultimately contributing to higher end costs.
Tesla Loses to China’s BYD in EV Sales Race
In the fourth quarter, Tesla lags behind China's BYD in electric vehicle (EV) sales, as reported by the Wall Street Journal.
Although BYD is experiencing substantial growth, it confronts significant geopolitical challenges from European and U.S. regulators, including ongoing investigations and potential tariffs, which may impede its expansion opportunities.
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Best Regards,
James Lim, SFA Founder
Top 3 discussed stocks : $Tesla Motors(TSLA)$ $Pinduoduo Inc.(PDD)$ $NVIDIA Corp(NVDA)$
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