Christmas week is just ahead. We are almost coming to the end of the year. I know I have talked of rebalancing, but there is time enough for that. After Christmas, there is exactly one week before we officially end the year, and that will be when I rebalance my portfolio. Will we have a Christmas rally? Its possible, and I certainly hope so, since volume is light, and it takes little to bring markets up. The Christmas cheer, putting everyone in a good mood will help too. The Singapore market has been kind of stagnant this month so far, but other markets like South Korea, Taiwan, and Russia have charged ahead.
In any case, it is shaping out to be a pretty good year for equities. While markets did not charge through the roof the way they did in 2009, the overall trend was still up. Even the US market is now starting to buck up. So, when I take stock in the week after Christmas, I may be surprised at the returns of my US equity fund.
As things quiet down towards the end of the year, I believe a lot of the concerns that have plagued this year will also subside. We don’t hear any talk about the Korean tension anymore. The red shirts in Thailand? Nobody is talking about that anymore, and Thailand is one of the two best performing markets this year. US double dip recession? We still hear every now and then from either experts, analysts, or economists expressing concerns about the state of the US economy, but earnings continue to surprise on the upside, and the US economy continues to grow.
How about China tightening? They are still tightening, but they have been putting in property curbs, raising bank reserve ratios for the entire year. If the China economy was supposed to have a hard landing, we should be seeing it by now. It simply hasn’t happened, and now it appears that while China tightening will continue, they won’t just keep on raising interest rates blindly until the economy stutters.
Europe will continue to experience volatility every time the next European country faces a spike in interest rates when it tries to go to the market to lend money, but I think the situation is mostly factored into the market by now. We have been seeing this European crisis flare up again and again since May this year, and its starting to look like a rerun of a bad serial. It will get old after a while.
Ultimately, diversification is the key. Diversify into equity funds, bond funds, and even alternative investment funds so that you won’t be totally caught out even if stock markets stumble. I have been getting my research team to look into the alternative investment space, and we should be having a research article up on that soon. For now though, enjoy the upcoming Christmas week. After that, I promise that we will have a 2011 outlook, plus I will rebalance my own portfolio in the last week of the year.
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