After most Romanian Indices fell 90% from 2007 highs, we screamed In March 2009 suggesting a great buy opportunity. We wrote about march reversals, we wrote about Oct bottoms and we tried to convince most of our readers and investors that markets don’t go to negative and 90% cheap was a great accumulation time. Of course for those of us who were watching us in 2007 would also remember our sell calls near historical tops at BETFI 95,000. A few reasons, the current market levels are great opportunity to accumulate and buy for a 300-400% return in a few years.

A few reasons. 1. Humans will speculate and fight till the time they live. So even in the worst crisis, there will be people speculating on a market price. There will always be people who differ in their value perceptions of the market and in their judgment whether the world is coming to an end or not. There will always be a section of speculators who will bet against the world coming to an end and buy. This is why markets exist. 2. Contrarian investments are known to fair better than momentum investing. Though it’s harder to be a contrarian, as one has to wait longer for opportunities. But contrarians make more money than momentum investors. It’s a know fact. 3. There is no better time to be a contrarian, when majority is extremely negative. As is the case now. Majority feels that we are getting into a secular bear market. Moreover since markets are already near 90% from 2007 tops, the valuations could not be more attractive. Unlike a momentum investor a contrarian knows well that markets can’t fall below zero. 4. The current market price structure suggests that prices have reached all time historical supports (Illustrated Charts). We don’t think BETFI will break 15,619 low. We think the multi year low is already in place. And it’s time to buy SIFs and most of the blue chips. 5. A contrarian buys with a larger holding period and knows that there is nothing called a perfect bottom. 6. Investors who look at DOW JONES and the problem regarding US deficit should understand that though we are in an interconnected market, market indices have different performances, and while Romanian BETFI moved up 300% from 2009 lows to 2010 highs, DOW JONES just moved up less than 90% over the same time. So market performances and macro economic drivers are always different over the longer multi month term. 7. We also mentioned this prior. Emerging markets like Romania can give cues regarding direction of global equity. We continue to look higher on Romanian equity and global equity. Accumulate and buy this market. Multi year reversals are around the corner, as early as September 2011. Next week we will look at individual blue chips and their relative rankings and Jiseki cycles.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.

Author: Orpheus | Date: 12 August 2011 | Comments (0)

Tags: alpha, Romania

Categories: Alpha Romania, Research Updates

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