The Coming Bear Market?

Recently, the performance of the stock market does not perform well. Does it means that the Bull Market is coming to the end? Bear Market is coming soon? The candlestick pattern indicator is showing a weird signals. Based on the backtesting results,

HSI: Market (2007)

A breakout signal on 29 Oct 2007 with four candlesticks and then a gap drop signal to begin with the bear market. In fact, it was the beginning of a Bear Market,

If compared back to the recent HSI (2017),

Exactly the same candlesticks signals have appeared again. A breakout signal then four candlesticks and a gap drop signal with a similar Volume of transactions.

KLSE (2017)

For Malaysia Bursa, the stock market started to perform poor in June onwards. Recently, there were also a continuously 8 days of dropping in the stock market. In addition, the recent highest point in Sep was even lower than before in June, in which the market proved that the economy might be collapsing. The most critical point is 1753, better hope that the stock won't drop below that level. If not, 1727 (-3.34%) will be the next resistance line.

According to these recent performance, it is quite dangerous. However, nobody will exactly know or inform everyone that the Bear Market has arrived (not until you have almost reach to the bottom). Personally, I think everyone should re-examine your portfolio and try to get rid of useless or underperformance stocks as the market does not really look so healthy.

Technical Analysis - The wave analysis showed that this is the final wave of the Bull Market (5th wave) before the bear market has come. For those safety investors or low risk investors, short term stocks should not be considered as the current market is quite difficult to play.

Be Prepared For The Bear Market to arrive! Have you think of any strategies to prepare for the coming bear market?

Important rules for Investment

It is always important to remember certain important rules for all investors before trading in stock market,

1) Do not invest with borrow money. 

People always hope that the price will go even higher at the current price. So, they choose to borrow money to increase their stock portfolio.  This is not highly recommended, what if the stock price drop? No one can guarantee what will happen tomorrow, even on the market.

2) Diversify the portfolio

Everyone should diversify their stocks. Do not only 'ALL IN' in one single particular stock as the risk is way too high. Over diversify also quite difficult as too many stocks to monitor. Hence, please only select those stocks that you have done your detailed research on it.

3) Cut loss 

This is the most important rule, everyone should set a "Cut Loss" price for every stock. Many people loss a lot of money due to they do not perform a cut loss system. I will explain further on cut loss in the next blog as it involved Technical Analysis.

4) Invest as early as possible

Everyone learn from mistakes. By investing early, you could understand more about stocks and you might achieve the best returns after many years of investment. Always remember, stock investment is not a Rich Man's Game, anyone could be the stakeholders and gain profits throughout the years by dividends.

5) Avoid poor earning companies

Never invest into a company that have been losing money for the past few years. Normally, i will not invest in those companies that have negative earning (Not even a single year for the past 10 years).

6) Fundamental research

If you purchase stocks without a proper research, you are actually gambling money and you may lose money too. Hence, it is important to make sure that your selective stocks are not overpriced or no growing company. Fundamental research include PE, ROE, EPS, etc. I would be explaining it in details in the later part of the blog.

7) Do not over trading 

When a person over trading on the stock market, they will lose their conscious. They will slowly becoming a gambler and slowly they will lose track on their originally planned strategies. A good investor will only invest in a good fundamental stock and hold it for many years. For instance, the way that Warren Buffet invested in Coca-Cola.

Besides, I came across that Barclay Wall Street has set 10 Power Commandments rules for their employees, which it is quite interesting as it teaches people to respect their job as well as themselves while doing working in a investment banking.

Invest smart and don't lose money on the stock market.