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What is ‘slight fatigue’ for the share market?

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According to Oxford dictionary via google, this is the meaning of fatigue. “extreme tiredness resulting from mental or physical exertion or illness.” Well, if this is used to describe the share market, should we be running away in the near future?

According to financial-dictionary.thefreedictionary, fatigue is described as “Exhaustion”. When used in the stock market potentially, this is the meaning: “A situation in which demand has overwhelmed supply or vice versa. The term is especially used in investing when too many traders have taken a short position or a long position relative to the number of traders on the other side. This can be an indication that the price for a security has peaked (if there are too many buyers) or bottomed (if there are too many sellers).”

Okay, briefly, it says that perhaps many people (investors) have started thinking that just perhaps the stock price in the stock market may have reached the peak based on business fundamentals. Thus, perhaps it’s best not to buy and hold because the chance for it to fall would be high. Now, moving forward when you hear anyone saying that BURSA Malaysia starts to show fatigue, you can confidently tell them what is ‘showing fatigue.’ Right? Here’s what JP Morgan is saying about the U.S. stock market.

Article in markets.businessinsider.com In a note to investors, JP Morgan said that investors need to more discerning over the next 6 months before markets are showing a ‘slight fatigue.’ These are the main things they said about the stock market in the second half of 2020.

  • Investors should be more selective over the next six months as some assets will outperform others, JPMorgan said in a recent note. 
  • “Own anything but cash” paid off after the market crash, but that strategy could lose steam in the second half of the year, the strategists said.
  • The bank advised betting on COVID-19 “endgame winners” such as tech, communications, and healthcare as opposed to all cyclical or defensive stocks.

Please do read their recommendations in the article yeah. Article in markets.businessinsider.com

There were no articles about BURSA Malaysia suffering from any ‘fatigue.’ However, foreign funds have been selling. This was the latest news about another RM600 million being sold by foreign funds. (click to read) Maybe the foreign funds exited our stock market to back into their home markets? If they were returning those funds back to the U.S. then they should also heed what JP Morgan is saying too.

Have you been buying some stocks lately? Yeah, I think many friends I know have bought some stocks in recent weeks. I think many stocks are undervalued if we use their past performance as benchmark. Just need to note that past performance does not guarantee future performance and we really do have a crisis currently which is worldwide and not limited to just Malaysia or a few countries. However, when I compare it to the Fixed Deposit (FD) rates, I seriously do think the dividends may just beat the FD rates. Plus with stock, there’s that potential to sell if prices go up. With FD, it is fixed yeah. However, if you have not read anything about any listed company, please skip the stock market. Knowing nothing means you are speculating. Please do not do it yeah. Happy investing and stay safe.

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