Final Phase of the Bear Trend?

DUWI · 1 Final Phase of the Bear Trend? Sat Aug 04, 2012 11:38 am

DUWI

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Seems like the market is belatedly adjusting downwards to some atrocious financial results from some of the so called bluechips. Good FORWARD LOOKING RESEARCH from Brokers would help to build confidence in the market. We must encourage Brokerage RE-SEARCH Departments to do more SEARCH and less RE(view) and unearth hidden value in companies. This will shore up confidence in the market, rather than the current lack of forward looking information/estimates/projections. MARKETS WORK ON INFORMATION.

On the positive side, the market seems to be in the THIRD and FINAL PHASE of the Bear Trend, with share prices adjusting both upwards and downwards to emerging corporate fundamentals/results. The FIRST PHASE was when share prices fell sharply in tandem due to over-valuation following the peak in early 2011. The SECOND PHASE was when market valuations DE-RATED (adjustment to lower PE ratios) from highs of 20+ to the current 11-12 times.

My view is, look for a change in the trend in interest rates for a bottom in the market.

Slstock · 2 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 12:10 pm

Slstock

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Excellent first post. Welcome to the forum. I cannot help but agree with most of your points.
But all these brokers needs to do genuine research . We know how some overvalued IPOs were glorified by some research reports . These guys should not be biased to talk about extreme forecasts to push shares.
Also the best thing is for readers to be aware about the basics so they will know how to read these reports and catch exaggerated ones.

Regarding interest rates, within the last couple of months interest rates have been rather stable. Not sure how much more CB can increase as it will effect growth.

DUWI · 3 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 12:17 pm

DUWI

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slstock Admin, you are correct, in the sense that the over-valued IPOs in 2011 sucked out a huge amount of cash from the secondary market and the banking system (margined funds), which exacerbated the Bear Trend.

Slstock · 4 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 12:30 pm

Slstock

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DUWI wrote:slstock Admin, you are correct, in the sense that the over-valued IPOs in 2011 sucked out a huge amount of cash from the secondary market and the banking system (margined funds), which exacerbated the Bear Trend.

Yes these overvalued IPO killed some retailers. There was a time any IPO will get oversubcribed by many times. Now even if a good stock comes at attarctive valuations it will ggo down less than IPO Price in this bear market. Some of these broker research credibidily went away after these bad IPOs.

But that does not stop all the other Broker houses to use their research department to come up with clear and convincing/believable research to support the current company status.

BTW, Please call me Slstock . Admin is a post I am voluntarily doing at this time as a social service.

Redbulls · 5 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 12:36 pm

Redbulls

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Srilankan Capital market lacking with qualified investment Research personels or advisors.
Hope in future there might be?

Most of the broker huts employed school leavers and started to train,hopefully they'll be ready to do wonderful job to our capital market in near future.

DUWI · 6 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 12:43 pm

DUWI

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Why don't we push the CSE/SEC to conduct short training programmes for Research Personnel at Brokerages by bringing down experienced persons from overseas (say India)?

Slstock · 7 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 1:08 pm

Slstock

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DUWI wrote:Why don't we push the CSE/SEC to conduct short training programmes for Research Personnel at Brokerages by bringing down experienced persons from overseas (say India)?

DUWI,

Firstly is the issue
a) due to competent personnel not available in Sri Lanka to train new comers
b) the existing personelle are incapable of conducting proper research

or is it because some brokerages knowingly does not encourage research and some when they do , do it for personal benefits . I have seen some quality research reports in the past. So i presume a) & b) is not really a huge issue

If you noticed, the past few months have been very quiet with research( at least we did not see many reports coming to public). I see soft logic research being active again.

Also as an intermediate suggestion, below might be a possibility

Appoint an intermediate research group supported by SLBA and CSE

a) personalle can be appointed through 1 or 2 representative from each broker house with research dept
( to cut down new hiring and over head costs )
b) appoint a suitable commitee ( editor etc)
c) these reports are then published though the intermediate group so any biased reports will come under scrutiny withing the group before it come to public
d) designates certain nubmer of reports every month or quarter to keep the trend going ( buy or sell recommendations)

I am sure others will see issues with this approach also but this is one way to get the current dormant broker research going with some level of peer review

Think of it like the Open source development groups. Companies provide the personnel on free basis and an interest group is formed to meet certain tasks for the benefit of the society

DUWI · 8 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 2:03 pm

DUWI

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slstock, Your open-source format is an excellent idea. I think this would really work well for the forum, where interested members could join in.

sahan8896 · 9 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 9:03 pm

sahan8896

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No question marks needed on the topic.It's simply obvious.Who bout early are winner,who missed the bus are looses.Who still have doubts are the biggest looses Very Happy

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sahan8896 · 10 Re: Final Phase of the Bear Trend? Sat Aug 04, 2012 9:22 pm

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http://www.bloomberg.com/quote/CARS:SL/chart

CARS was stable at 450-470 range.Small quantities traded Friday pushing index down.will be back to that range again.

gamaya · 11 Re: Final Phase of the Bear Trend? Mon Aug 06, 2012 10:01 am

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I dont know much abt the turnaround point; but the continuous foreign buying indicates it's a good time foe selective buying. And when the retail horde catch up with the sentiment at a later stage, it would be profit taking by them.