Higher Yields Needed, Higher Valuation Market Goes


Saw this on Facebook feed and it just made it all clear once again that the bull had just started. If you remember previously we said that the interest rate would continue to go higher before market really crashes this proper evidence to prove our point.

Junk bond traders channeling money to stock is just a good example of pushing stock valuations higher and in return, the cost of debt would eventually rise. Companies using bond issue to finance their operations would need to raise the coupon yield to get investors of fixed income interested once again.

The overvalue market would then spark central banks to rise interest rates ensuring that money goes into savings rather than risky investments. Junk bonds would have to compete with risk free rates rising their yield higher. This goes on and on…

Never in history the market crashes with low interest rate. High interest rates are the killer of bulls.


Well I did not use the word cheap any more compared to 2016 where everything is really cheap that time. The rise this year had come to a halt for Malaysia but not for US or other Asian markets especially Hong Kong. Bull run is imminent in that sense.

Bear in mind that we stated the bull just started but we no longer deemed that the market is cheaply valued. But if you fear the bull now, you might feel left out forcing yourself to start buying stocks again but at higher levels. That’s really not worth it.

The best solution is to keep hold of good fundamental companies and try to avoid speculative trades with companies that has rubbish fundamentals.

Up till now, we are still bullish and need to prep towards 2018.


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