Is 2000 something impossible?

Is 2000 something impossible? Well, to be frank, I do not believe that it is never something not impossible. What is your basis then?

First all of, there is nothing impossible. Even for the chance of merely luck, we still stand a fairly random chance to see the KLCI strike 2000. This is the first reason, which I could easily think of why KLCI of 2000 is not something impossible.

Besides, the current KLSE’s PE should be roughly around 18-19 times. Mathematically speaking, this is not something very expensive, nor something not worth gambling on. Historically, if I am not mistaken, the bear strike often happen only when our PE reach above 25 times. As such, we could form a rough guess that a PE of 18-19 times, should be a fairly reasonable price level.

Thirdly, the previous 27 February 2007 large bear strike serve as a very healthy risk releasing mechanism. During the drop and the reversal, I could observe that the market is strong. Despite bad news and panic selling, the market receives strong support. A huge percentage of the investors are optimistic that our country economic future is bright and the drop itself is a bargain. Talking supply and demand, there is too much knowledgeable bargain hunter around 1200 to 1250 in KLSE. Apart from that, despite the drops that scared most of the retailers out of the wits, the market still continue it’s upwards motion. Well, ladies and gentleman, if we focus on the fact instead of opinions, one fairly obvious conclusion that we can form is that despite panic and fear among many of the investors, the price still moving strongly upwards; is a clear indication of confidence among the local and foreign institutional. Again, never look down on the wisdom of these institutional investors, they are formed by teams of experience elites in the industry and have many highly qualified and well-trained analysts.

I do observe that there are many people who think that 1300 is something too high, which they never believe that Malaysia could be doing so great. Well, Malaysia is doing nothing great now, I agree, but let look at many of the listed companies, they are having many businesses in the booming China, India and Middle East, some started to venture into Vietnam as well. These companies are not those past companies in 1997. They are totally difference! Today is not the past, today is today, and to be investors today, we need to look into the future. Never suffer from mental accounting, in which you judge the previous 1330 peak as the benchmark for high prices. Ultimately, how high is high, and how low is low?

Talking about economic indicators… Malaysia Balance of Payment is becoming better and better. GDP growth is also relatively stable and encouraging. Thanks to the oil price shooting up and some economically beneficial actions taken by the government before the election. In fact, the debt which Malaysia government owed to foreigners due to 1997 crisis is already being paid off. From one of the journal I was reading 6 months ago, if I am not mistaken (JP Morgan) stated Malaysia as well as some of the South East Asia countries are beginning a economic recovery from the worst. In fact, what is 1300? It could be equivalent to a 600 during 1992.

Well, the election is also coming. Stock prices tend to rise during the election periods. For this, I am pretty optimistic for the near term for KLCI to break through 1330.

Sincerely, nothing is predictable… While I am anticipating a bullish trend, I never conclude that a bear is not possible. Anything can happen; the financial market could crash anytime. There is no riskless journey in the financial world. However, after thinking and considered many facts and possibilities, I will still maintain an immediate KLCI target of 1350 and 1450 at the end of this year. In 2008, 2000 could be something not impossible. In fact, I would predict that, in 2020, looking backwards, we could be sitting in a very expensive sofa and thinking back, “oh, 2008 was the Zaman Kegemilangan of Malaysia, luckily I read an article that was arguing that 2000 is not impossible, and since the, I rode the trend to become a multi-millionaire today.”