Many people have been asking whether the current global outlook is still favourable to investors. There seemed
to be endless happenings around the world that could drive world economies to the ashes. The American Presidential election results ended a few days back. The Quantitative Easing measures undertaken by the various central
banks is still ongoing. The never-ending roller-coaster saga of the oil supply and price. China’s economy is still an uncertainty. The bull run in the stock market has already gone past the 8th year mark. Many European countries
will be holding elections or referendums in the coming months. Despite the seemingly bleak outlook, my answer is still a Yes! to investing now.
Why Yes?
Most investors would know that it is almost impossible to predict the market as we will never know how the
world will be like tomorrow. The best example is when the US Federal Reserve announced their intention not to raise interest rates across the past few meetings. Each time, the responses from the stock market rose or fall
with seemingly no fixed pattern. As there will always be a never-ending stream of good or bad news coming in, it should not be the main reason for us to put off our decision to invest.
One good or bad news is that the US Presidential election has finally ended! This means that I can start
looking for investment that will be more in tune with the new President's policy. It also allows me to perform a quick future forecast and analysis. My best current guess is that Trump will be against US's trade deals with
foreign countries, especially the TPP and China. So I will be more cautious to put my money into companies that draws their income mainly from trade-related business with US.
My Investment Focus
I will likely be focusing on looking at companies that invest in countries or business sectors with lower
trade exposure to the US. In my opinion, businessman Trump might drive US to focus their investment in their domestic market to create jobs such as manufacturing, that could in-turn enable greater employment among the lower
income group. For trade, US is likely to work on the areas that could help them to gain trade surpluses. So US companies that falls within Trump's export policies (which is still an unknown) would be an interesting sector
to watch.
If US pulls out of the global trade, I believe that China or Russia or maybe Japan could jump in to fill
the trade void. They will probably focus on the Asia region first before moving towards to Europe (depending on their elections next year) and Africa. So in the next few years, I might explore companies with regional exposure
in Asia, notably Japan.
So what can we, as individual investors, do?
My personal take is that we should keep a look out for stocks to buy amidst the uncertainties but be more
selective on the business type, business quality and buying price.
In general, my personal process is to first perform a global analysis before drawing down to the specific
business sectors (i.e. retail, commercial properties? shipping industry?) or specific countries that could fit into the analysis. These will then form my list of investment criteria. After that, I will select a list of suitable
companies with strong fundamentals (i.e. low debt, cash-rich etc) and dividend returns. Lastly, I will set a Target Price to buy/sell them. Even if the market falls below my buying price, I will be fine to hold onto them for
the medium or long term. Will Trump really cancel the TPP deal? Will Trump really move US military out of Asia? What will the outcome of Brexit and EU elections be? We will never know until it actually happens. Rather than
looking at news as purely good or bad, I believe that it is how we form our own judgements based on the events which would help us to make suitable investment choices.
I will like to ask my readers about your views to the global outlook too. Will warmly appreciate any of your
comments here!
Together, let us all Go & Huat ah!
GoHuat
Related articles
0 comments:
Post a Comment
Feel free to drop your comments here!