There was a little bump on the stock market. There are financial issues at China, Europe and even US. Most of the world stock market had been up a lot since March 2009.

DOW last 1 year performance

FBM KLCI last 1 year performance

Lately bump caused most of the index erased previous months gain. DOW back to 10,000 level after dropped 7% from peak. And FBM KLCI was below 1250 after dropped 4.6% from highest point. Shanghai Composite Index dropped 9.7%…

DOW past 3 months performance

FBM KLCI past 3 months performance

And finally the stock that I use to monitor ~ Tanjong PLC. It is still above SMA 50. But going to break it soon if all the stock index still going down.

Tanjong PLC past 3 months performance

Back to the question… Is stock market going up or down? Or a far more correction is coming? Hmm… That’s the question that I cannot answer. Look like the stock market is going for side way. Riding the roller coaster.

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Is December good time to invest in stock market? That’s the question that I ask myself lately. I did not buy any stock after selling Tanjong plc stock last month. And plan to buy back it again now. But when is the question. Therefore, I did some research on the previous years’ performance on the month of December. Let’s see the history speak for itself. Anyway, past historical record does not mean that it will perform as same as before. Stock market is not predictable. But you can know it better by studying more.

December 2008 KLCI vs Dow

As you can see, KLCI gains around 4% while Dow at 8% on December 2008. Below are the record from 2007 onward…

2007 – KLCI 2% gain while Dow flat
2006 – Both around 2% gain
2005 – KLCI 1.5% gain but Dow 1.5% loss
2004 – KLCI 1% loss but Dow 2% gain
2003 – KLCI flat while Dow 5% gain
2002 – KLCI 4% gain but Dow 6% loss
2001 – KLCI 8% gain and Dow 3% gain
2000 – KLCI 6% loss but Dow 1% gain
1999 – KLCI 9% gain and Dow 1% gain
1998 – KLCI 6% gain and Dow 4% gain
1997 – KLCI 13% gain while Dow flat
1996 – KLCI 1% gain but Dow 1% loss
1995 – KLCI 2% gain and Dow 1% gain

Woo… There are lot of blue colour ~ gain. I have my answer now. The stock market for December 2009 will likely go up.

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Do you trust stock research firm analysis? That’s the question that I always ask myself. I still remember that Maybank Investment Bank told its investors to SELL! SELL! SELL! Don’t BUY anymore on 5 October 2009.

Past 2 months FBM KLCI performance

FBM KLCI was at 1206.25 on 2 October 2009. And it is at 1265.74 now. That’s 5% increases. If you bought unit trust based on FBM KLCI index, you will have 5% returns within 2 weeks. However, if you trusted Maybank Investment Bank, you will loss some money (or did not earn).

Personally, I do read all the analysis from the experts. But I will use them as a reference only. They are also human and cannot predict the stock market trend. Therefore, always study and analysis more. I expected another spike in stock market. And it did. But how far can it go? That’s another question…

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With the announcement of Reserve Bank of Australia (first of G-20 central banks) to raise key cash rate by 25 basis points to 3.25%, this mark the worst danger for the economy had passed. Bank Negara Malaysia (BNM) should hold the Overnight Policy Rate (OPR) until the end of the year. But most of the financial stocks price had gone up before the adjustment.

For example, CIMB stock price increased 16% in a month from RM10.48 to RM12.22. And most of other FBM KLCI financial stocks are performing very well too. However, have them gone too far? Anyway, people don’t care much about it. They just know that when the bull is running, keep buying. Just make sure that you know how to sell when bear is backed.

By the way, when the central banks increase interest rate == financial stock will go up.

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Are you buying stock at FBM KLCI currently? Or you are selling them now? Well… There is no exact right or wrong answer for it. It all depend on own perspective.

Quote from OSK Research…

There is still room before the market reaches the 50-day MAV line. Hence, there is still a possibility of the market retracing all the way to the moving average line from the recent peak. Anyhow, our view towards the near-term market will remain firmly bullish as long as the 50-day MAV line is not violated.

Quote from Maybank Investment Bank…

Tactically, all investors should dispose of their stocks and reduce their positions as the autumn period of great downside volatility will continue. The American and global markets will be under heavy selling pressure and may crash in large daily percentage drops. So, local investors may want to ask the question “Why buy now”? – as we expect significantly lower prices in the next month or two. For funds that maintain the select band of counters that prop the FBM KLCI up, any and every rebound would be an opportunity for smart investors to sell at better & higher levels. SELL! SELL! SELL! Don’t BUY anymore.

So what is your opinion? For me, I just bought some value stocks. Just want follow the famous investor, Warren Buffett who buy stock at the value price, or even better undervalue price.

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