Beware the Disconnect between stock market and reality….

China’s factory output declined in Apr – this reflects drop in worldwide demand. South Korea recorded 476,000 job losses in Apr 2020. The British economy shrank by a record 5.8%.

Singapore’s airport used to have an airplane take-off or land every 5 minutes. Today, there are only a total of about 80 flights per week.

Yet, in the midst of all these indicators of a severe economic recession, the stock market rose steeply about 30% from its lowest point about a month & a half ago. While we have been seeing gradual and marginal declines day by day this week, it is nothing compared to the steep drop earlier.

As investors, we must definitely be cautious that there is indeed a disconnect between stock market prices and reality. And it usually takes even longer before the reality is reflected in the property market. What’s keeping the prices up? Possibly the bailout offered by the government or investors who are taking profits after buying Low a month and a half ago. Whatever it is, these are signs of an asset bubble. Do a careful analysis before you take the next step to invest.

Check out these articles to get a good status check on the current situation.

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