Stock Market Behaviour: What’s up with Wall Street?
I still remember the interview that I watched on TV3’s Ringgit Sense a while back involving our second Finance Minister, Tan Sri Nor Mohamed Yakcop. According to him, speaking of international trade, we are relying less and less on the United States of America. This was when he was questioned about the impact on Malaysia if the US goes into a recession.
However, as we have seen up until today, we are still being affected by what has happened in Wall Street overnight, stock market-wise of course. So, what’s up with that? Generally, if the Dow Jones declines, it will somehow influence the direction of the local market the next day.
Now, based on my limited knowledge, I shall try to explain this peculiar occurrence.
First of all, we need to understand that the stock market is not driven by economic data, or any fundamental data for that matter. This is especially true in the short-term.
Filed under Explaining The Market | Comment (1)Subprime Crisis: Part 2
Just to add to my earlier post on Subprime crisis.
As I said in the post, people were “trigger-happy” in taking up new loans in 2003 because of the low interest rate. Housing boom started to develop. This was until the interest rate was becoming too high to bear.
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Understanding the Bull Market and the Bear Market
You may have heard the terms Bull Market and the Bear Market in the newspapers or on TV. What are they actually? Is it a market that trade bulls and bears or what?
Alrighty…
Markets have trends. These trends have their own nicknames. One trend is called a Bull. Another one is called a Bear.
When the market is generally trending upwards, we call it a Bull Market. When the market is trending down, we call it …. yup, you guessed it right, Bear Market.
Filed under Explaining The Market | Comments (2)Subprime Crisis : What it really means?
The US Market was hammered by the SUBPRIME crisis recently and unfortunately right now, the problem is still going on. Investors are going wild on figuring out what’s going to happen soon. As you all know, when the US market sneezes, everybody else catches a cold. Being the largest economy in the world, whatever that happens in the US market, it will in some way impact the global market.
So, what exactly is SUBPRIME crisis? I’ll try, to the best of my limited knowledge, to explain in this post.
First thing is to know what SUBPRIME MORTGAGES actually mean.
Out there, there are a lot of loans/mortgages. All with different criteria and requirements. In the loans hierarchy, SUBPRIME LOAN is placed at the low end, i.e. subprime loans are given to people who have low credit rating. Here in Australia, they are known as “low-doc” loans. In Malaysia, I’m not so sure. If somebody out there knows, please put a comment down below.
Back in the 2003, US interest rate was really low. If I’m not mistaken, it reached as low as 1%. Now, that means, a lot of people were chasing the chance of securing loans for themselves. Of course, for those who have low-credit ratings, SUBPRIME loans are weapons of choice. These “cheap debts” start to become famous.
Filed under Explaining The Market | Comment (1)
