INSIGHTS

Duncan Donald

Wed, Dec 12


Staying Profitable through Bull-Bear Market Cycles

This year has most certainly highlighted the vulnerabilities of single asset class dependency in trading and investment, especially in the equity markets. Whilst the early part of the year would have had the savvy investor buoyant and supported by a seemingly unbreakable, upward trending market. But the fears of global economic slowdown brought by the US-Sino Trade War, sliding Emerging Markets, Brexit confusion, the Italian Budget deficit impasse and an aggressively hiking US Federal Reserve, brings the year to a close with the gains all but wiped away.

This negative downturn in global stock markets has investors naturally concerned and it is believed that Equity funds have seen withdrawals of nearly $3.5 Billion over the month of November as risk reluctance and flight to safer investment ensues. With major indices like the US S&P 500 moving negative on the year and many stocks hitting bear market territory, equity investment concerns are justified.

Therefore, the question has to be when investing, how does one select investments that are not solely dependent on positive market sentiment.  When trading in the global stock markets and physically holding shares, the investor is dependent on upward moves. But when stocks turn lower, the skill comes from cherry picking the next “big thing” or seeking value from diversification between safer and riskier sub sectors either within a country or across number of national stock markets.

Whilst astute traders can go part of the way to circumnavigate the pitfalls of over exposure and maximize gains with strong analytical stock selection, the exposure to a falling collective index is something that at times is wholly unavoidable.  Country centric or sectorial contagion is a serious concern for long term investment.

At Kylin Prime Capital, in our more dynamic strategic investment portfolios, we specifically selected a blend of investment vehicles, with a view to maximizing diversity of risk whilst facilitating the ability to profit from both positive appreciation and downturns in the movement off all asset classes traded.  In our portfolios, we invest in equities and currencies via CFD’s (Contract for Differences).  These contracts permit us to enter both long and short trades, removing the typical ties to the buy and hold restrictions of the physical equity market.  Therefore, rising and falling markets and stocks hold an equivocal level of opportunity for capital appreciation, as is available when trading in the currency markets.

Consequently, our blend of experience-led fundamental knowledge and strong technical analysis abilities helps us to select investing and trading opportunities on both the short and long side of markets and opens the door to further opportunities to profit.  Of course, all opportunity must be managed with seamless risk analysis and discipline, and that strong and methodical risk approach is the fundamental building block on all of our investment portfolios here at Kylin Prime Capital.

With the potentially negative economic drivers of 2018 still all very much in play, unresolved and generating high volatility moves across markets, we see no reason why current high volatility will cease as we move into the new year.  Obviously global harmony is of course ideal, but from a trading and investment perspective, the ability to benefit from all eventualities, alongside robust risk management sets up great opportunities into 2019.


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