Think shares are going to be cheaper? Think again...

Many analysts are predicting that in 2012, things will get worse before getting better. Hence, to hold off buying stocks for now. I really think it is not the best piece of advice. A close look at the markets now reveal a very different picture of things. Many stocks are emerging from the  deep slumber that they were in since middle of last year (Remember bear markets can be short!). In fact, some stocks have gone as far as break their 200-day EMA, what I view as a start of a new bull market. (Remember I wrote last week on the high probability that this bear market could be ending soon. I am so glad I did not sell during the bear, but have instead been buying). KepCorp, SembMar, SembCorp Ind, GLP, F&N... are some of the local blue chips that have broken above their 200-day EMA. There could be very bullish times ahead. Indeed, the old adage "To buy when others are fearful" is true. Many people are putting off buying stocks, yet stocks are creeping up.

At this juncture, I only manage to find one voice who shares exactly my sentiments (which is not really a bad thing since it wll not be bullish if too many people are touting buying stocks). According to Michael Gordon, chief investment officer of equities at BNP Paribas Investment Partners, stocks will do very well in the next 3-6 months, and even post double digit growth for the year. Extremely cheap valuations, positive US data coupled with people getting bored with problems in Europe will be the key drivers for stocks to go higher. The good showing of equities in the first weeks of the year already indicate that risk aversion to equities is fading. The next trend will be a short-term rebound in global equities, where emerging market equities will outperform their developed market peers. For a more sustainable bull market, Gordon is looking at price action of gold. If equities rise 10% to 15%, but gold doesn't, then it is a clear sign of more good thing to come for equities. Gordon also warns against investing in defensive stocks as they could underperform this year.

I am happy that finally, my portfolio is seeing some improvement. But on the other hand, a little regretful that I have not bought enough for this bull market. Nonetheless, should this still unconvincing bull market stall, I will be buying again. Meanwhile, enjoy the ride up (hopefully). My personal opinion is that it should last a few months at least.