I just like to remind everyone that money supply is constant unless the governments start printing again.
However, even thought it is constant, it is flowing.
When Fed stop printing, but Euro and Japan continued to print money. It continued to push the economy to the current heights as the money flow into each individual companies' earning.
This will also explain that despite the share prices at a high, the PE ratio of many companies (even STI) has yet to hit a significant high figure yet.
But do note, as interest rate increases, money supply flowing within the economy will reduce. This is because people will save more, buy more treasuries bonds, etc.
Do also remember the Fed may continue to increase the interest rate 3 times in 2018. In addition, after Fed increases interest rate, China also increases interest rate.
Remember China has a very leveraged country in 2017, as the government has been successful in reducing leverage.
Therefore, with the top 2 economies increasing the interest rate, investors should tread carefully in 2018.
I like to emphasize that I am not writing this to spread fear. Even for me, I will still stay vested. I just like investors to invest more cautiously in 2018.
One way to invest is to invest in companies making profit and not heavily leveraged.
Another way is to invest in companies that are growing fast with a sustainable business model. Its net profit margin should be huge and its business should not be a one-time wonder. This could be slightly hard as not everyone can understand and analyse the business correctly.
The final way is one where I had promoted constantly. It is to use the scorecard method. It allows investors to invest in counters that could be deem undervalued with cash-producing businesses, and also not heavily leverage!
Anyway, if you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information!
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Watch out for the next post on the final update of my portfolio!