In last week’s update, I reported that I had closed all my positions due to the lack of direction in the stock market. As I watched the stock market every day this week, it became clear that we are probably due another leg down before markets stabilise.
In normal economic conditions, I would advocate holding onto positions for a lot longer but the volatility of the markets in recent weeks has destroyed many trends.
This is the main reason why I have been trading with profit targets and taking them as soon as they are hit. It is difficult to do sometimes but it has saved my portfolio from suffering the kind of losses reported in the media this week.
Stock Markets This Week
A very interesting article in the Telegraph this week highlights just how surreal the indebtedness of the UK has become which has been cleverly masked by headlines of falling markets. What is really driving the fear that investors have in the stock market is summed up nicely towards the end of the article:
“Bond yields are rock bottom because markets fear that the developed world is on the brink of an extended period of zero growth”
Clearly, investors have lost faith in politicians to resolve the issue. That and the news this week that The Federal Reserve Bank of Philadelphia showed a massive contraction in manufacturing output sent markets lower on fears in the US of another recession. The fact that Vice President Joe Biden is this weekend in China trying to convince the Chinese that the US will not default on the loans given to them by China will not help calm the fears in the stock market.
In corporate news this week, Paul Polman, CEO of the multinational Anglo-Dutch food and detergent company Unilever said that ‘Europe and the US will be, for the next 10 years, low-growth territories, I’m afraid. So, soon we will have 75pc of our turnover in emerging markets – by the end of decade.’
None to report – 100% cash.
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Any trades listed above are closed trades as I do not make public open positions.
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