Hope you guys have been making tons of money the last few months. The stock market has been really really hot and I believe that it has got a lot more upside for 2011. Although I remind myself that the market is hard to predict in the short term, there are a few factors that make me quite confident that the bull run will continue. This ‘perfect storm’ for a bull run is due to the following factors
1) US Pre-election Year. 2012 will be elections for the next US President and so this year 2011, is pre-election. Year, if you study the last 50 years of data, you will find that the stock market goes up the most during this year (out of a 4-year Presidential cycle)
2) Singapore Election Year
I have no hard stats to back this up but I can tell you from experience that the stock market tends to go up the months leading up Singapore General Elections. Hmmmm…. I wonder why.
3) Stock Breakouts
Many blue chip stocks that have been trading within a certain range for months are finally beginning to breakout of their long-term resistance. A good example is Citigroup that has broken past its $5 resistance. If it can beat earnings this coming 18 Jan and stay above $5, it good likely keep going all the way to $10 (its fair value). Once Citi passes $5, mutual funds will start to buy it as by law, funds are not allowed to buy anything below $5.
4) Ultra Low Interest Rates and the liquidity effects of QE2
5) Stock markets like Singapore, US and Hong Kong are still trading at fair value or below fair value (as in Singapore) and there at least a 30% upside until the market is over valued
This is the latest snapshot of my portfolio