Fed cutting interest rates and it's implications

As promised, I will post my analysis.

I have been waiting for the decision by fed and analysing the market to get a clearer picture of the market.

Firstly, we all know that the fed just cut interest rates again. The fed has been cutting interest rates for many times ever since the sub prime woes came out.Not surprisely every time it cuts, the stocks prices all over the world surges as US market is the biggest of all and it will lead the others. One point to know, singapore market is extremely dependent on the US market. Meaning if it goes up , we will follow and vice versa. That correlation in other markets like hang seng or nikkei is abit weaker meaning they at times go in inverse direction of what the US goes. In other words, singapore market has what I called, no market identity and it tracks that of the US and it's correlation is extremely strong.

Secondly, we must know what is the sub prime woes all about. It happened as bank lend ppl with poor credit history and this ppl can't pay! In other words, they default on their payment , creating what we called a liquidity problem (not enough cash in the market). So next, what is the main function of the fed? It is to curb inflation! That is if inflation rises, it rises interest rates and vice versa. Hence this got nothing to do with the sub prime woes, even if it has , the correlation is very weak and it doesn't really solve the problem of subprime at all. In summary, the problem is still there!

Thirdly, I have analysed and read many research reports and most concluded that the fundamentals of the asian market is still strong. Hence many suggested to continue playing the market.Analysing the above points, we know that singapore market is dependent on the US market. Subprime woes isn't solve, fed is just covering the problem at the moment and boasting confidence by cutting interest rates, and fundamentals of asia is still strong. Hence in all, I suggested that things may blow up in time to come ,meaning the subprime problem will probably resurface and investors will know that the cutting of interest rates didn't solve the problem and they will cause a huge drop in the US market. Thus , the singapore market will also follows and many of us will be trapped if that happens!

So , should we not play and watch the market and maybe miss the uptrend now? I suggest you still can enter the market, but no penny stocks buying. Buy bigger companies, and apply value investing. Do not enter all your capital. Prefably take 1/3 of it to enter now if you can find good companies that are undervalued. Next I suggest to wait for a few fed meeting first, and a couple of months to see if anything do happens to further confirm the trend first before entering. Your 2/3 of capital will be invested only if it crashes and you buy extremely valued buys (so you can buy low sell high) or when the trend seems to be still up after some time, slowly enter the other 1/3 again and keep the 1/3 of cash so you still got money to buy valued buys if anything happens.

Ultimately, the strategy is as follows. Enter slowly, part by part if market goes up so still got money to buy good stocks if market crashes.Enter full force if market crashes. And all companies must have good earnings ratio , operating cash flows and must have low pe ratios.

I hope this helps. Thank you