Ultimate Stock Tips

A Recession is Coming

Publish date: Sun, 07 Aug 2022, 10:36 PM
Unique content created once in a blue moon to increase the quality of articles of klse.i3investor.com. (used to be weekly)

Last week, I contrasted the stock returns of i3investors from recent years with 2022, where 2022 was worse than 2021 or 2020. 

Today, I dug out a news from August 2020, which stated that trading volume on Bursa Malaysia hit a record high of 27.8 billion! ( https://www.theedgemarkets.com/article/klci-finishes-down-692-points-bursa-volume-tops-27b-securities-record-high ) Yet, trading volume was a very low 1.91 billion in August 2022. (https://www.theedgemarkets.com/article/bursa-ends-lower-second-straight-day) 

My interpretation is that, August 2020 was the time of euphoria while August 2022 may be the time of lethargy. If buying at the time of euphoria is wrong, then selling at the time of anxiety should be wrong too. While there is no guarantee stockmarkets will move upwards or downwards from now, it's an interesting study to see whether one should buy or sell or hold during low trading volume market condition. I shall check back the results in future, say in 6 months time and 1 year's time. 

On the other hand, news reports are circulating that the yield curve has inverted again. Yield curve has been a pretty accurate indicator of recessions. What should investors do? Well, if you think stock markets will be worse off in 6 months time, surely one would convert equity to cash now to aim for a better buying price in future. For investors who think that the stockmarkets has priced in all negative news, they'd be accumulating stocks in glee now. Investors who are hopeful and prefer a wait-and-see approach like me, would hold on. 

It remains to be seen whether the Fed's interest rate hikes will be able to tame the hostile inflation. Stockmarkets will fall again if it fails to do so. The inverse is also true.

I am still bullish on tourism stocks, banking stocks, breweries, affordable properties. 

A recession is coming, the Bear Market may not be going, but I will still keep holding. 

Disclaimer: This article is not tailored financial advice, but mere general stock sharing / observations. Please do further due diligence. The author disclaims all liabilities from readers.

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