Wednesday, May 29, 2013

This rally has legs



“Bought a lot Japanese stocks today” is what I wrote to my global macro investment class in the days after Japanese stock markets experienced the big one day drop last week. The Japanese officials seem a bit confused intellectually though now the markets have gone their way for a while. I usually do not make too short term a bet. But I still believe those guys will smart up in the end and keep doing what they are doing.

The rest of my money are still in US small cap or small cap value, and I bought as much as I can. As I said last September, this rally will have a long leg and lots of returns. I confirmed and advocate more buying in February. I hope you have enjoyed the ride. If you are trying to sell in May and go away this year, you will be the sore loser.

Going forward, the rally still has a couple of months to go. After that, it will stall and turnover around the end of this year. As I have discussed in February, China will have another round of slowdown, Europe will suffocate itself a bit more by then again (but will relax before and after that), US austerity drive will have more visible impact on the economy. However, if you believe the long term predictions of mine, that will be a good time to buy more U.S.

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