Posted by: donmihaihai | January 22, 2008

A look at statistics

I am lucky again as I got what I wish for, a buyer market.

The headline news are extremely working for traders and I close getting sick by reading articles with words like “panic”, “crashed”, “biggest drop”, “cut rate”, “recession”, etc, etc… It looks like end of the world. When I go to forums, there separated into mostly 2 groups. 1st group has a dim outlook for the market while 2nd group is pretty keen to buy into the current panic thinking it is cheap, undervalued, etc, etc.

Cut those noises out and take a look at some statistics.

Major Indices(Most of the country focus UT focus point)

HSI down 32% from the high of 31958.40 reached in Oct 07.

Nikkei down 31.3% from the high of 18300.39 reached in Feb 07.

STI down 26.6% from the high of 3906 reached in Oct 07

Shanghai down 25.5% from the high of 6124.04 reached in Nov 07

Seoul down 22.8% from the high of 2085.45 reached in Nov 07

TWII down 22.7% from the high of 9807.91 reached in Jul 07.

Sensex down 21.1% from the high of 21206.77 reached in Jan 08

Jakarta down 19.2% from the high of 2838.48 reached in Jan 08

SET down 19% from the high of 915.03 reached in Oct 07

DJI down 16.3% from the high of 14280 reached in Oct 07

KLSE down 11.2% from the high of 1524.69 reached in Jan 08.

This list show that the slump range from KLSE 11.2% to HSI 32%. The duration from the highest to current index range from last than 1 mth(Jakarta, KLSE and Sensex) to 11 mths (Nikkei).

If this current market is the start of a new bear market than there are 3 important things to note:

1) Duration : Thru history, the duration taken for the market to fall from top to bottom range from a few months to a few years. The average duration should be > 1 year.

2) Percentage drop from top to bottom : History show that the range from top to bottom is around 20% to 70%. It is not uncommon to drop 40 to 50% before it reach bottom.

3) The highest it climb, the hardest it drop.

If this is a bear market, only Nikkei look like it is close to a bottom as the duration of 11 mths, a slump of 31.3% and at this point, Nikkei has gained <100% from the last bottom reached in last bear market.

For the rest, most of the duration is too short, a drop of 20 to 30% is not that huge yet and most have gained a significant amount from the last bear market.

Of course I can’t predict anything but this drop is neither too little nor too much.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: