Buy into a correction, not sell into one. Start chasing beta for better performance in the next wave.

Markets are still falling and the negative news flow continues to come in. Greece, end of the commodities cycle, downgrades etc. Sigh, no wonder so many people are confused about what to do with their investments. In the past couple of days, I have seen a few larger investment houses recommending investors to cut their exposure to resources to underweight. These are the exact same proponents that asked investors to be aggressive in accumulating commodities. You know what makes it worse? The people who work for them, like yours truly, end up have to call for the same rhetoric as them even if I disagree. If I had a dollar for each time I reminded investors to look at the longer term, I will probably be staying in a good class bungalow in Cluny Road.

I had a client who asked me whether he should sell into this correction and it baffled me. The often used cliche of "Buy low, sell high" has really not registered into people's minds. Very easy to use and remember but virtually impossible to put to practice. Emotions are what makes investors weak and irrational. My response to him was a straight "No". What you want to do is to sell into a rally and buy in a correction. Mind you, this investors which I deal with are some of the smarter people in this country but they are no exceptions to falling victim to emotions.

Global markets have experienced close to 2 weeks of weakness in the market, making me look like the Sage of Singapore as I have been warning about weakness in May for the past couple of months. When is the buying point? I really do not have an exact point. All I know is, I am using the USD as my key gauge. The USD has rebounded off its lows of $1.22 against the SGD to $1.25. The dollar index which is an indicators of USD value against a basket of currencies have rebounded from 72 level to 76. Buying time? I believe it is very soon. What about the end of QE2? No worries, because Ben Bernanke is still at the helm and he is going to maintain the size the of the Fed balance sheet so the market will still be flushed with liquidity.

Profits are being booked by professional investors after a good run during this QE2 driven rally, that is why you are seeing so much weakness in commodities and equities. Do not be deceived and sell your positions. Just hang on, you will thank me later. I am sure.

In my previous post, I mentioned something on the debt ceiling in the US. I am choosing to ignoring it first because I have absolutely no interest in the political wranglings of corrupt politicians trying to use this issue as a bargaining chip. In my view, nothing is going to happen by July on this issue. So no worries.

Just buy aggressively in this weak market. I will start buying when the dollar index hits 76.5, that is when I go out and start buying. It is not far from that point. This is just a technical rebound on the USD from oversold territory, it will not be too long lived. So take this opportunity to buy into higher beta stocks to ride the next wave of upside.

One headline that caught my attention was poor IMF Chief Dominique Strauss Kahn getting accused by a chamber main for sexual assault and being sent to Riker's island in reprimand is just the funniest story over the past few days. It is just perposterous to think that a man of his stature would do such a thing. He has been one of the more outspoken experts on the financial crisis in 2008 and has been particularly critical on the US. He is not exactly the most complying and submissive IMF chief the US would have liked. Throw in the fact that he is seen as a possible front runner for the French presidential elections, it is not surprising that he is being taken out the picture.

Remember Eliot Spitzer the disgraced US Attorney General who was known to be a hardliner on bankers? What happened? He was also caught for soliciting prostitutes. Considering how prostitutions and high end social escorts are part and parcel of Wall Street, it is just hypocritical that Eliot Spitzer was taken out of the picture for doing so. It was because he was coming down so hard on his investigations on investment banks and high flying bankers prior to the blow up of the subprime crisis. Conspiracy theory...what do you think? Just something interesting to think about.

Am I going to write about any stocks today? I guess not but I am currently looking at the a very interesting company which should be posted over the next week or so. You must understand that researching on companies is a tough job and it is even tougher to find companies to have conviction on. Why I am posting today is because I foresee a busy schedule for the 2nd half of the year and it will be tough to catch up with the postings. Need to make at least 52 postings this year which looks like I am far behind schedule. It is a discipline I am trying to keep to. Wish me luck.

Have a great rest of the holiday.

Best,

SVI