Master Rider Blog

Liquidity Play Intact

October 10th, 2007 NW Teong

If we look at the global stock indices now, they all look with great similarity, i.e. up and up and up! For instance, look at the Dow Jones Industrial index chart below.

Many of the indices are making historical highs and the trend is nothing but bullish. In short, the huge surge in global indices due to the re-emergence of liquidity is being played out nicely as I have predicted in my earlier blogs weeks ago. This is also being helped by the fact that while US economy is probably slowing down, the global economy is humming along pretty well. If we look at the Baltic Exchange Dry Index (“BADI”), it has also closed at historical high of 9860 yesterday.

The BADI index has surged at an incredible speed, it was just about 2000 in early Jan of 2006 and in a space of less than 2 years has surged more than 390%! If we use this index as a proxy to world economy, then we can say that the global economy is doing fine but if we use it as an indicator to measure how fast human beings consumed our limited resources, then we should be worried. We should start to worry for the earth that we live in. Can our earth satisfy our insatiable demand of raw materials from food to energy? Can our earth withstand the pollution that comes along with further developments and perhaps exploitations? In short, can our earth withstand the abuse that we human beings exert on it for a long period of time?

In a materialistic world today, human beings are perpetually in search of greater profits at the expense of perhaps our only living place, i.e. the planet earth. We dig and dig for what ever treasures that we can find from the earth and we dump any kind of garbage back to the earth. At times like this, it is good to pause for a while to think of how we can contribute to the society and to protect the environment that we are living in. The very least that you and me can do is to do things without causing harm to our environment and to others. To me, an act that will harm our environment such as littering is a blatant act of selfishness. Those who caused harm to our earth really have no consideration at all for other human beings and for our future generations.

As for the stock markets, enjoy your uptrend ride but remember to build in some profit locking mechanism. For instance place a trailing stop order at all time, this stop order will be triggered only if the condition that you set is breached such as a fall of 5% in stock price. In this way, you can enjoy the surge but able to lock in profit should the market started to change direction. Cheers!

Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!

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Entry Filed under: Environment, Macro, Stocks, Singapore