junqi的博客
just personal musing
正文
The is almost the same but the outcome is a little bit different this time.
As soon as the opening bell sounded, the bargain hunters came in, pushed all the indexes higher. Who could blame them? the stock is much cheaper than a few weeks ago, and it is in the territory of oversold. and the same strategy worked not long ago.
Only this time, the things are different.
First of all, it is true that the stock is cheaper than a few weeks ago, however, if the economy truely slows down as anncdote evidence suggests, it probably is more expensive if you look back six monthes down the road. AND THAT IS WHY THE STOCK COMES DOWN. the fundamental has changed.
In a nutshell. Just because a stock was $80 before does not mean it will go up to $80 any time soon. This is because investors thought the company could earn $4 before, and now, the investors become doubtful that the company could earn that much, they may think now that the company can only earn $2. If the p/e mutiple remains the same, then, the stock now only worth $40. So, we are in a process of repricing the assets, until this process is done, and analysts have a good handle of future earnings, the volatility will be here to stay.
Another reason is that the FED may cut rate again, but they cannot do it until December, a long time comparing with last time. Last time, we have FED meetings in two monthes in a row.
Technically, there are a lot of peoples calling for the revisit of the August low, and we are just a couple of hurdreds point away from that low. Maybe, our best hope is for the market to drop a few hundred points from here, then, a temporary bottom can be reached. just Maybe :)
It is hard to say what we should do at this point. If you are an agressive traders, you may try to short those high fliers in tech land. or buy some beaten down sectors like retailers.. But until after market made its mind, our best bet probably is do nothing.
As soon as the opening bell sounded, the bargain hunters came in, pushed all the indexes higher. Who could blame them? the stock is much cheaper than a few weeks ago, and it is in the territory of oversold. and the same strategy worked not long ago.
Only this time, the things are different.
First of all, it is true that the stock is cheaper than a few weeks ago, however, if the economy truely slows down as anncdote evidence suggests, it probably is more expensive if you look back six monthes down the road. AND THAT IS WHY THE STOCK COMES DOWN. the fundamental has changed.
In a nutshell. Just because a stock was $80 before does not mean it will go up to $80 any time soon. This is because investors thought the company could earn $4 before, and now, the investors become doubtful that the company could earn that much, they may think now that the company can only earn $2. If the p/e mutiple remains the same, then, the stock now only worth $40. So, we are in a process of repricing the assets, until this process is done, and analysts have a good handle of future earnings, the volatility will be here to stay.
Another reason is that the FED may cut rate again, but they cannot do it until December, a long time comparing with last time. Last time, we have FED meetings in two monthes in a row.
Technically, there are a lot of peoples calling for the revisit of the August low, and we are just a couple of hurdreds point away from that low. Maybe, our best hope is for the market to drop a few hundred points from here, then, a temporary bottom can be reached. just Maybe :)
It is hard to say what we should do at this point. If you are an agressive traders, you may try to short those high fliers in tech land. or buy some beaten down sectors like retailers.. But until after market made its mind, our best bet probably is do nothing.
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