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Bubbles In Stocks,Commodities and Real Estate?

Stock-Markets / Liquidity Bubble Sep 10, 2009 - 03:01 AM GMT

By: Andrew_Abraham

Stock-Markets

Has too much liquidity throughout the world caused bubbles in stocks,commodities and real estate again? I have my opinions and others have theirs.What can be considered interesting is that a high level official from the Bank of China has come out publicly and stated in his opinion there are “Asset Bubbles throughout the world”.


Think of the potential consequences. As we are trying to dig out of the most recent bubbles.. they are inflated again…. & what can that cause? Is more pain on the way? Will there be massive inflation or deflation? Who really knows? Did the price of crude go up too quickly because many thought the global recession is over? Has crude gone up because of US dollar weakness?

This is what fundamental analysis try to figure out. The difference between fundamental analysis and trend following is that crude did whatever it did because “it did”. The price is the key. I find it very hard to figure why something has happened or will happen.On the contrary… with price action… it simply does happen.

Trend following is all about that…reacting to price action and following the trend. To me this so logical. I find it so hard to understand that so many try to figure it all out via the news or opinions. Isn’t much easier just to follow the price. If the price goes above a certain threshold, I will make a small low risk bet and see what happens. In many cases these trades do not work. However occassionally trend followers stumble into some very big trades just by making themselves available. This is really what commodity trading is all about.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading ddvisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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