I was down with a cold last Friday. Went to see the doctor just to be safe since I was in Kuala Lumpur the day before. Doctors are currently doing a roaring business, the child care centre that my kid goes to insists that if there is the slightest hint of sniffles, I have to get a doctor’s letter certifying they can go to school. And of course, we have to pay the doctor even if they are perfectly fine.
Don’t take this to mean I am big on healthcare as a sector though. While the long term demographics are a positive on healthcare funds (graying populations worldwide), short term wise, many drug companies are suffering as they merge and it gets increasingly difficult to put out that next blockbuster drug.
On another note, markets have been falling since last Thursday on the back of weak US job data. Nonfarm payrolls for June, which had been expected to drop by 350,000, instead fell by 467,000. Unemployment in the US stood at 9.5%, the highest in over 25 years.
As I mentioned before, job data and unemployment are lagging numbers and typically, are not good indicators of where the economy is going. In the current environment where markets have rebounded somewhat, many investors are looking for solid numbers and data to justify further upside in markets. Some are expecting all numbers to turn positive as soon as possible to justify that the US economy has bottomed out. And Asian markets often take direction from how US markets fare.
The truth though is that the economy never turns around like that, and even positive data, is likely to turn up in dribs and drabs. For investors with patience, it will happen. And valuations at this point in time are not demanding, and with earnings are generally quite depressed. So, in a recovery situation, earnings could jump quite quickly.
I will be putting in another $10,000 or more into markets this week. Will keep you posted! And I apologise for not being able to post last Friday.
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