Tuesday, January 8, 2008

Bull vs Bear Round 2 - A Draw

DJIA went up 68 points, then went down 68 points in the first hour of trading last night, then finally it ended up 27 points for the day. STI went up in the morning, as usual, then went down in the afternoon, with a long tail, as usual. It ended the day with 14 points down.

The bull and the bear are fighting fiercely again after the non-farm payroll data released last Friday appeared to be dismal. For this round, it is only a non-exciting draw. The market did go down a bit, but not very drastic, then it rebounded. Technical rebound, or dead cat rebound, or whatever you want to call it. It seems there is still a lot of money floating around, in investors' pockets, just waiting for the right time to release their power.

From this novice investor point of view, Ah Ben should not simply continue to cut rates. I don't think cutting rates is the right solution. Chinese saying "Cure the head for headache, cure the pain in the feet when there is pain in the feet", it will only cure the symdromes, but not the root cause. Just imagine you cure the syndromes of a cancer patient, but not the root cause, what good will it do to the patient? Oh, yeah, to improve the quality of life of a terminally ill patient.
But you put that in a macro economy, it will only delay the cure, and prolong the suffering.

Let's see what will happen next. It is gonna be interesting.

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