Remember the LORD for it is he who gives you the ability to produce wealth and so confirms his covenant... Deut. 8:18

Saturday, April 14, 2012

Is it time to cash out ..?

Ringgit has strengthen against USD from 3.60 in the last 3 - 5 years to the current 3.06 as shown in the first chart.
Manufacturers who export/sell their goods in US dollars, repatriate their profits to Malaysia will get less Ringgit now and these are reflected in their earnings. So a weak dollar is negative for exporters.

For foreign investor holding US dollars three years ago when Ringgit was weak and Malaysian equities were cheap, it was the near perfect time to ploughed your money in.
Now if you invert the chart, you would see it as a typical pattern of most stock market charts, forming a double top. Is this the end of the super bull run or will it pull back violently before the next upleg ..?

In the face of uncertainty of global market, would you pull your money out from Malaysia now that your returns from equities would easily have doubled and your forex gain 20 % ..?
Or coupled with the impending general election which is definitely going to cause a lot of volatility and opportunities in the local stock market, would you now liquidate and wait on the sidelines ..?

1 comment:

Remnant 888 said...

By the way, you can look at currency pairings, AUD/USD or even AUD/MYR and they show similar patterns ...

Ditto for S&P 500, DAX ...

Try analysing some of yr favorite stocks chart and see whether this holds true ...