Year of the Dog 2018

By Gabriel Yap

IT MAY BE THE YEAR OF THE DOG, BUT STOCKMARKETS ARE UNLIKELY TO BE A DOG

The Earth Dog will take centre stage from 16 Feb 2018 when we welcome in the Lunar New Year. Being the 11th Chinese astrology sign, the Dog is a symbol of intelligence and protection. While the Dog is generally Man's best friend, it also has a dark side. The dark side of those who are born during this cycle is that they are quick to anger, critical of others, stubborn and won't take advice, hypersensitive to criticism, and deeply emotional.

As I have predicted correctly last year - "the Year of the Rooster is the sign of awakening and dawn - it would mark a new orientation towards success - one garnered by hardwork and patience which are key rooster traits".

https://gcpglobalsg.wixsite.com/gcpglobal/blogs/back-to-hard-work-and-efficiency-in-the-year-of-the-fire-rooster-2017

The Dow Jones crossed a new high above 24,000 in 2017, the local FTSTI index notched its best performance - up 18%, its best performance in the past 5 years while REITS that we have recommended in our investment classes like Capitaland Commercial Trust, Suntec Reit and Keppel Reit registered total returns of 36 - 38% - who could have imagined that REITS could post such awesome return in a year!

The Year of the Dog is likely to continue to direct this orientation - Higher success for a smart investor would be to one that is able to continue to exhibit Dog-like characteristics of hard work, loyalty and reliability.

Before the smart investor looks ahead, I think it is wise to look back just 1 year ago when the assumptions that most investors held were -

1. The Federal Reserve will continue to up raise 3 times of 0.25% each or a total of 0.75% after a false start in 2016

2. The follow-through in market rallies following Donald Trump's election in November 2016 would come to a halt

3. The US$ is the best buy while the Chinese RMB would fall in corollary

The reality was - None of the above that the "experts" anticipated materialized! So how did stock markets generally fare in the Year of the Dog?

An analysis of the past 3 Dog Years of 1982, 1994 and 2006 actually reveal good news - other than 1994 which saw the devaluation of the Mexican Peso and Russian Rouble which led to collateral sell-offs in Emerging Markets and the Orange County Crisis, the Year of the Dog has generally been fairly unexciting years for stock market investors.

Even in the mayhem of the 1994 sell-off, the then STI fell 288 points from 2,377 to 2,089 or a decline of 12.1%. That turned out to be the 3rd Best Correction in the 1990s, a decade which saw 7 market corrections and a major market crash in 1998 due to the Asian Financial Crisis.

Lucky Numbers for this coming Year of the Dog would be 3, 4 and 9. Perhaps this would be the months for value buys in the markets for investors.

Lucky Colors for this coming Year of the Dog would be green, red and purple. I would not be surprised if any of the national soccer teams donning these colors turn out to be the World Cup winner in Russian during the summer.

The smart investor should also take note that that dog years are the start of many a revolution too.

The past Year of the Dog in 1982 marked the end of wilderness for the Dow Jones Industrial Index - one of the wonders of stock markets was that the Dow first crossed 1,000 points in 1966 and pundits then called for new highs. Instead, the Dow went through the longest sideway trading range of 600 - 1,000 for the next 16 years and managed to climb above 1,000 points again in 1982. Henceforth, the rest is history as the next 16 years saw the Dow performed multiple returns, well subsuming the lows of 2008 during the Financial Crisis.

Thus, Dog years can bring many changes, good and bad and economically and they are normally growth years although and earth Wu Xu years can also bring collapse of major institutions and large adjustments in the economy like stock markets of values of currency so take care with investments in 2018.

Happy Lunar New Year.

 

Gabriel Yap
Mr Gabriel Yap was an eminent stockbroker and investment banker who retired in 2009 to devote himself to philanthropy. He is well-known as the Investment Guru, having been regularly interviewed in the news media like Channel News Asia, Bloomberg TV, CNBC, MediaCorp Radio. Together with the prestigious Fortune Times, Mr Yap hosted the inaugural Asian REITS Pinnacle Awards 2016 in Singapore. Mr Yap was both Chairman of The Future of REITS Forum as well as Chairman of the Fortune Times Asian REITS Pinnacle Awards 2016 Judging Committee comprising of the leading CEOs, deal makers and who’s who in the Asian REIT sector. Mr Yap also chaired the recent Fortune Times REITS Symposium 2017.

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