Happy Lunar New Year! The new issue of Shares Investment coincides with the festive period, ushering away the Year of the Pig and welcoming the Year of the Rat.

A friend once told me that pigs are reared for food and, thus, I have always remembered this point and was rather cautious in the Year of the Pig. I have been aggressively trimming my portfolio since November, with the majority of my portfolio built up in the Year of the Goat.

I have been very patient with my portfolio, sitting on it from the Year of the Monkey to the Year of the Rooster, Dog and, finally, the Year of the Pig. Sensing that the “pig” is well fed and ready to be slaughtered, I took the decision to take profit.

The decision to liquidate most of my portfolio could also be attributed to the usage of the Logarithm and Linear Regression in projecting the long-term trend of the Straits Times Index (STI). According to the charts, the STI has already peaked last October, which means that the four-year Bull Run has ended. We are now in a bear phase that can easily last for a number of years.

When will the bear end? According to my charts, the STI has fallen to a mid-level and has yet to find a bottom. At best, it is at a reasonable level that meets fair valuations.

The Dow Theory states that there will be a meaningful and substantial rebound before the market crashes even further. The rebound has yet to occur and, if you have yet to sell away your stocks, investors should wait for the rebound to take place before selling. Anyway, stock prices are now at an equilibrium with economic fundamentals.

This is the Year of the Rat and I hope that all readers can be as nimble as the rat. The rat is nimble, alert and very adept and scurries away as quickly as it appears. Since this is likely to be a very volatile year, we should be quick at entering the market and then exiting as quickly as possible when there is profit.

It is time for all the major companies to report their earnings immediately after the Chinese New Year. As long as the profits are good, stock prices will definitely climb hence it is good to make a guess on which are the companies that will report good earnings.

Open your eyes and ears to the television, radio and analyst reports, as these will provide clues to companies that will do well. If most analysts expect a particular company to do well, avoid these stocks because the market will not take disappointments lightly. On the other hand, take a bet on companies that are not expected to do well because earnings surprises will see the share price surge by quite a fair bit.

The major US banks and the Treasury Secretary have come up with a plan to rescue homebuyers who default on their loans. The “Project Lifeline” aims to help homeowners who have defaulted on their housing loans for more than 90 days by providing them with a grace period of another 30 days. During these 30 days, there will also be discussions to restructure their debt so that banks do not repossess the homes of these owners who fail to meet their mortgage obligations.

This move will invariably help to ease the pressure on “forced-selling” of US homes and stop home prices from falling even further. In addition, Warren Buffett’s offer to the nation’s three largest municipal-bond insurers of a reinsurance package that would strengthen their troubled finances has cheered the markets. He has taken the opportunity to buy up assets at rock bottom prices and this is indeed a smart move.

Politically speaking, all the moves are aimed at helping the Republican candidate win the US presidential election.