From The Straits Times    |

goat investments 640.jpg

Image: The Straits Times

The Year of the Wood Horse had promised plenty. But it turned out to be all horse talk, given the lacklustre stock market last year.

For the coming Year of the Wood Goat, astrologers are not promising that investors will flock back to the stock market.

While I am not astrologically inclined and prefer to get my investment advice from reports written by hard-nosed analysts, even I cannot resist the temptation of reading the predictions put out by these starry-eyed experts.

However, to some stock dealers, relying on the shengxiao – the Chinese zodiac, a 12-year cycle with an animal assigned to each year – is a sure way to predict this year’s big market winners.

But I believe there may be a more logical explanation to all this mumbo jumbo. As American author Mark Twain once noted, history never repeats itself but it often rhymes.

Those of us who have been in the market long enough will agree that the market alternates between cycles of feast and famine. That makes a 12-year cycle as good as any other combination which may be conjured up by market strategists as they try to find symmetry between events to predict future stock price movements.

Such is the pull of the Chinese zodiac that even perfectly respectable research houses have a swing at using it to make their own forecasts.

Foreign brokerage CLSA, for instance, puts out a tongue-in-cheek Fengshui Index Report just before the Chinese New Year, which spins a yarn about the future performance of the Hang Seng Index in Hong Kong.

Yet, there is one point both stock market experts and fengshui experts agree about this year: It will be no walk in the woods.

In its latest report, “Here we goat again”, CLSA noted that while goats are harmonious by nature, investors should “be prepared for the typically affable goat to reveal his gruff side this year”.

Investors are advised to stay sure-footed in order to retain their balance when they encounter rocky slopes in the financial market. “This is the year to be on guard and not get fleeced,” it said.

CLSA also observed that investors should stick to “defensive” stocks whose businesses are not as dependent on the performance of the wider economy, as the wooden nature of the goat interacts with two elements – fire and earth.

“Government officers, cram schools and educational equipment, as well as forestry, agriculture and gardens should thrive this year,” it said.

Still, despite the considerable caution flagged by geomancers and stock experts, I believe that the brave-hearted investor will reap handsome rewards if he tries to be like the mountain goat, sure-footed and hardy, as he navigates in a rocky environment.

Like the mountain goat, a good investor can have a profitable year, even if investment opportunities may not be as plentiful.

The previous two Goat years had also started on a dour note for the stock market, but they ended on an upbeat note.

The Earth Goat Year of 1991 began with the stock market in sick bay for several months, as allied forces led by the United States battled to free oil-rich Kuwait which had been occupied by Iraq.

Like many investors, I was hoping that the then new Goat Year would live up to its namesake and offer some peace and quiet after the roller coaster tossed up by the ill-tempered Horse Year.

Sure enough, the Iraqis were thrown out of Kuwait and investors who had the common sense to hang on to their shares were handsomely rewarded.

With the Water Goat Year in 2003, Iraq again came into focus, with the US leading a coalition to turf out its dictator, Saddam Hussein. Worse was to come as a mysterious virus, known as Sars, struck terror in us as it claimed victims across the region.

But what I liked about the 2003 Goat Year was that it ended with the Straits Times Index hitting a 34-month high, which ushered a bull run that only ended five years later with the eruption of the global financial crisis in 2008.

Now, we are at the onset of another Goat Year and financial headlines have been flashing red again with news of collapsing oil prices and waning consumer demand.

It is not exactly a good time to be an investor as we grapple with the uncertainties which make us wonder what we should do with our nest egg – keeping it in the bank gives us almost zero return.

But if history is anything to go by, this Goat Year will end on a high note. Fortune rewards the brave-hearted investor. Good luck on your investments in the coming Chinese New Year.

This article was first run in The Straits Times newspaper on February 8, 2015. For similar stories, go to http://www.straitstimes.com/premium/singapore. You will not be able to access the Premium section of The Straits Times website unless you are already a subscriber.

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