Monday, October 27, 2008

Charts Are Unusable. 1997 Asian Financial Crisis Already Proves That.

Lately there was a few blogger in their blog that I face, was still using a chart as a guide to determine where the market headed to. No doubt, chart is very useful in term of guidance for us to trade and to trace the way it move but in this financial meltdown or crisis, any suggestion about how the market move, where is the supporting line, what would be the next target is totally unusable and unacceptable.

I have posted several projection about where the market might found its support or where might be the bottom is but to no prevail, all this projections have falls into the drain.

Charts are only useful when the market is stabilize without any disaster happen. Several of my friends had call me and ask me why lately there was no charts shows on my web ?

The answer that I gave to them were, it is better for us to know more inputs on the information about the financial crisis that we need to monitor at. How bad is our current financial crisis in our world. Would it be as bad as 1997 Asian Financial Crisis or would it be the worst that we can't even imagine of.

Many of my friend who previously trade in the share market, a few of them still survive and many of them have already vanished, bankrupt and some even cannot recover what ever losses that had been made during 1997 Asian Financial Crisis.

Now it is not about the chart that will tell us when we can buy or to sell at this kind of financial crisis. But outside there are still many chartist using it to determine the market movement. I was wondering why ? I'm chartist but not as good as they are if I want to compare with those who have the experience one but I know how to trade in share market.

I have survived several crisis until now and I know as a chartist I need to discipline my self. During this financial crisis, charts are useful for us as to guide us how to trade but not to determine when would be right timing for us to buy or to sell.

As I mention earlier, charts are only useful with their indicators and reading when the share market is in a stability position. So let's face it to the fact. In this most disastrous situation more input about financial crisis and news would be the top priority because it affect everyone.

Who know during the financial crisis started back in Thailand on July 2, 1997 because the collapse of the Thai Bath, we never knew that it would spread through out the neighbour country and even jeopardize so many country including South Korea, Philippines, Indonesia and Malaysia. Hong Kong was also being attack but they were lucky because they having a strong reserves and a strong support from China. A few times their currency being attacked but they managed to overcome it.

Take a look on the charts what really has happen during 1997 Asian Financial Crisis. No one will know where the bottom is ? I don't. It took nearly one year from the day of the financial crisis strike and share market started to recover after former Prime Minister Tun Dr. Mahathir Mohamad pegged the ringgit against the US Dollars. The effect towards the Malaysia's financial instruments took nearly three years to recover. Still remember the whole history event ?

During 1997 Asian Financial Crisis, various task force agencies were formed. The Corporate Debt Restructuring Committee dealt with corporate loans. Danaharta discounted and bought bad loans from banks to facilitate orderly asset realization. Danamodal recapitalized banks.

Happy Deepavali


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