3-Bullet Sunday (Is The Stock Market Headed For a V-Shaped Recovery...Again!?)
Why did China and US markets bounced back up?
Dear Compounders,
This week’s edition of 3-Bullet Sunday will be slightly different.
Many of you have asked if the market will see a strong recovery similar to March 2020.
Well… let me gaze into my crystal ball…
.
.
.
Nope, I got nothing.
But hey!
To thank you for being a reader I won’t let you walk away empty handed.
I will explain why the markets (both China and US) started making strong move upwards this week.
To uphold the spirit of brevity for 3-Bullet Sunday...
I will try to keep this read to under 5 minutes.
Ready? Let’s go!
I. Why Are China Stonks Up?
China stonks have recovered to levels not seen since… two weeks ago.
That’s because China’s Vice Premier Liu He, who is the key economic advisor to Xi came out and calmed the markets.
He reassured that:
China will continue to support foreign listings (addressing the ADR delisting risk)
It’s important to maintain HKSE’s stability by strengthening communication between Beijing and Hong Kong’s regulators.
To ensure consistency and stability, all policies with large effects on the capital markets should be coordinated with the financial authorities.
II. Why Are US Stonks Up?
Nothing significant about the businesses changed tbh.
The Fed raised interest rates by 0.25%, inflation is still rampant and the war in Ukraine is still ongoing.
Mr. Market hates uncertainty… and when that happens it usually goes on a rampant sell off.
My guess is Mr. Market has already expected and priced in these factors. I’m not a macro guy and I’m not going to act like one but in times of crisis we should take a good hard look at our portfolio and start stress-testing our companies to ensure that they are able to survive during tough times.
I don’t know if the market will resume the sell-off this coming week but I do know that there are many reasonably priced businesses and I am definitely a buyer.
If you like to read more about inflation, interest rates and more macro stuff, check out my notes on Howard Marks recent podcast interview.
III. I’m Can’t Contain My Excitement…
For the upcoming Beginners Investing Course!
To meet my fellow readers who have signed up for our Beginners Investing Course starting this Monday!
Nothing feels more empowering than being able to analyze a company yourself from scratch to finish and being able to value them confidently. And we no longer…
buy or sell based on stock tips
form our opinion based solely on media headlines, and
panic whenever there’s volatility in the markets.
I have given talks and interviews on many platforms, from Singapore’s national radio to newspaper interviews and to huge events with over 1,000 viewers such as the Seedly’s Personal Finance festival…
But this will be the first time I’m teaching an international audience with students from over 12 countries!
If you like to join the tribe… TODAY is the final chance.
The first session begins 21 March 9am EST/9pm Singapore Time.
Till next week,
Thomas Chua