Bad hiss-tory

PHOTO: Bad hiss-tory

Buying stocks according to the phases of the moon may seem like a daft idea but every year, I succumb to the urge.

Like many fengshui experts and market strategists in Asia, I find myself dusting off my crystal ball to try to see what the future may hold for the market as a new lunar year kicks off.

And it's not always a fruitless exercise. Some dealers swear that share prices move according to the characteristics of the 12 animals that make up the Chinese zodiac calendar.

Take the Year of the Green Monkey, which ran from February 2004 to January 2005.

It contained no end of monkey business, with accounting scandals hitting three hotly sought-after stocks - China Aviation Oil, Citiraya Industries and Accord Customer Care Solutions.

As for the Year of the Golden Pig two years later, I greeted its arrival with great anticipation. "That is because it is not just any Pig year, but a Golden Pig Year - the first in 60 years. Some say it is the most auspicious in 600 years," I wrote at the time.

It turned out to be prescient as the benchmark Straits Times Index surged to a record high of 3,865 in October that year - a high-water mark that has yet to be passed.

The following year - 2008 - was the Year of the Earth Rat, and I wrote that even before it arrived, the rodent had gnawed a big hole in investors' portfolios. The STI went on to lose about half of its value that year as the global financial crisis struck with gale-like force.

But 2009 - the Year of Earth Ox - started on such a gloomy note that even hardened financial writers like me were cowed by the uncertainties.

But hope springs eternal and I wrote that February when sentiments were at their bleakest that nothing would gladden the heart more than watching a thundering herd of bulls on the move again.

It turned out that the thundering herds did return after the United States Federal Reserve poured trillions of dollars to steady the wobble in the world's banking system, sparking the biggest stock market rally in a decade.

Last year had also defied the odds, as the Dragon chased away dark tidings and showered the markets with its blessings, leading Wall Street and other major bourses to soar to their highest levels in five years.

So what might the Year of the Water Snake behold as it slides off today? Spare some pity for the poor Snake. It has a tough act, following the magnificent Dragon.

The CLSA Feng Shui Index report said: "The past five Snake years - going back to the Water Snake of 1953 - are not encouraging. In only one year did markets end the year convincingly above their opening and the size of the drops of the most recent three has been growing ever worse."

There are shades of previous Snake Years that cast their long shadow over this one. One superficial similarity is the feeling of complacency that is being carried over from the Dragon as investors throw caution to the wind and make a dash for trash.

This has spurred demand for junk bonds - the debt issued by financially weak companies - to such a high level that yields have fallen to mid-2007 levels.

It is a cheerless reminder of the irrational exuberance of 1989 - an Earth Snake Year - before Wall Street plunged by almost 7 per cent on Friday the 13th in October, after a collapse in the junk bond market.

Then there was 2001 - a Metal Snake year - when suicide bombers hijacked commercial jetliners and flew them into New York's World Trade Center complex.

That calamity claimed almost 3,000 lives and caused global markets to recoil and crash in horror. Wall Street itself was closed for trading for three days.

But the biggest stock market crash in modern history - on Oct 29, 1929 - must surely take the cake for Snake Year meltdowns.

Almost 25 per cent was wiped off the value of Wall Street shares, ending a super-bull run that had roared for years and ushering in the decade-long Great Depression.

Yet the Snake is also known to be insightful, intellectual and determined to achieve success, and these wonderful traits have been displayed before.

Go back to 1977 - a Fire Snake Year - that marked the launch of Apple II computers which triggered a technological revolution, one that the firm continues to this day.

And it was in a Wood Snake Year - 1965 - that Singapore achieved its independence and started its climb to First World status.

So take heart. The Snake Year may well mark the start of a period of abundant prosperity and technological advances. Gongxi facai.