Trumpflation H1 and more expensive valuation for H2 2017

Is President Trump good for the stock market? Well, it does seem that he has been good to both the Dow Jones Industrial Average (DJI) and Bursa Malaysia. The image shows the DJI. Why was he good for the stock market? According to chief executive officer and executive director Teh Chi-cheun of Pacific Mutual Fund in an article in TheStar, the first half of 2017 was rosy because of Trumpflation. What is Trumpflation? This is the definition given by Investopedia. “Trumpflation is the inflation that might appear during Donald J. Trump‘s U.S. presidential administration. Though Trumpflation is still only speculative, markets have already signaled they believe Trump will spur inflation in the U.S. dollar.” So, it did happen and Trump’s election as the latest President of the U.S is good for the stock markets!

Teh further added to this positive remark, “The second half of the year would continue to be positive – economic data continues to be robust and the recovery in corporate earnings is intact.” Before all of us start buying stocks like crazy, he also said thus, “However, valuations are getting rather expensive.” He shared a few of his predictions too. He said that there has been an increase in political and policy risks but the market has absorbed all of it very well. Second half would still be okay but definitely would not perform as well as first half. Watch US carefully as Trump is doing his best to roll-out his version of fiscal stimulus and the expected boost to US GDP. UK may have a new Prime Minister while in China, there will be the National Congress. National Congress is China’s parliamentary session. I think it will be a peaceful one. Good for all nations if there’s stability.

To really start thinking about stocks, it’s important to understand what Teh meant by expensive valuations. There are already many blue chips which everyone loves and everyone buys and by now, for the popular ones, the valuation is already running ahead of its fundamental. For those who could hold, perhaps 12 months later, the valuation based on the price today will be okay. As long as the company continues to earn good profits. As for me, I would recommend looking through just a few stocks whom we recognise the brand / product. Here’s a good start to understand what the company is all about way before we decide whether to buy or not to buy. https://klse.i3investor.com/index.jsp It has target prices for the companies, what is the company all about and lots of charts (technical) and chats (gossips, rumours and debates!)  Oh yeah, here’s an earlier article about stock investments too. stock investment tips May be good not to try to buy, then keep looking and when the price goes down, we faint. Haha. Warren Buffet said “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”  In brief, buy companies which others have not yet pushed up its prices yet.

written on 4 July 2017

Next suggested article: Property market cannot fall or grow by itself

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