"The market will bottom once everyone stops guessing where the bottom will be"

It's a nice quote that I came across a few days ago. I think it makes perfect sense. This market will not bottom if everyone is trying to catch the bottom. That explains the all time high volatility levels in the stock market.

...It has been a long time since I last updated my blog, primarily because I still have been trying to accumulate capital in a bid to start trading the FX market.

...Here are my quick thoughts on banks

I have been thinking about the banks lately. It is clear that the market hates the investment banks. It's amazing to see GS trade at 10 year lows given that the firm is filled with amazing talent. The fact that we see that stock trade at such low valuations is because the market is just uncomfortable with the fact that the government is taking stakes in the banks. In fact, all the banks who participate in the TARP program are liable to the government and have to be accountable to their stakeholder - the US Treasury. It's obvious that the market is trying to get used to the numerous interventions by the government in the market. And they hate it. Look, the Fed cuts interest rates, stocks fall, the Fed takes up equity in the banks, stocks fall. They flood the system with money, and stocks also fall. They establish swap lines with other central banks and stocks also fall.

The US banks are now quasi-government. If the stock keeps falling everyday, it is inevitable that the banks become nationalized. Actually, there is nothing wrong with a quasi-government bank. Some markets are comfortable with a quasi-government bank - like the Singapore market. Singaporeans have been all along aware that Temasek has a stake in DBS and all through the years the bank was traded on the exchange as one of top local bank on SGX.

Local investors were perfectly comfortable with the government taking a stake in the bank. The stock continued to rise through time and investors are still looking to buy more DBS stock as it drops further. This goes to show that it is really a matter of perception and confidence that investors have in the company. In order to shore up their stock price, the banks have to win the public's confidence. Maybe cut salaries, shore up risk management, tone down leverage..

...On capital market expectations

I think we might see lower oil and gold prices in future. Yes, I think it is better to short the rally than to buy them on dips. Same for Corn

I think equities might head higher, but I am still cautious on them.

30 Years are neutral, would wait before shorting them. 10 Years might continue to see a strong rally. 2 Years are neutral, would also wait to short them.

The Euro is oversold, the Aussie might be supported. The pound might slide further. The yen might surge if the equity market breaks down. And the Canadian dollar also might slide. The Franc might depreciate a bit, which means that the dollar might weaken