The W-shape recovery is gaining traction. By early next year, many unemployed Americans will run out of unemployment benefits. With domestic consumption declining, another round of fresh layoffs is not impossible.

Countries relying on exports to the US market could face demand cuts. The domino effect could be far reaching.

So, the million dollar question is “When’s the stock market going to dip?” If the stock market is 6 months forward looking, then the market should have dipped a couple of months back. But this hasn’t happened. Then,.. is it dipping now?

I started buying unit trust with EPF money in June 2009. Yesterday was my second time withdrawing money from EPF to buy unit trust. According to the guidelines, a contributor can withdraw once every 3 months from EPF to invest into approved unit trust funds.

This time, I was recommended by the unit trust agent to buy the Public Islamic Equity Fund. The sales charge is 3%. According to the agent, this 3% is capped by EPF. I wonder if I could get a lower sales charge if I buy directly over the counter without going through the agency or agents.

It will be interesting to see if this managed fund can outperform my index fund (UOB-OSK KLCI Tracker).

My next withdrawal should be after the Chinese New Year, perhaps sometime around March 2010.

It baffles me. The US unemployment rate hits 10.2%, worse than the expected 9.9%. And guess what? The stock markets around the world rally for the second day in a row. What is going on? Has the investor gone mad?

The people have to realize that, more and more consumers are becoming jobless. Consumer spending will reduce. Corporate revenue will reduce. And so will earnings, unless these corporates initiate another round of layoff to save on administration expenses.

Can someone enlighten me as to why the stock markets are rallying in the face of this worse than expected unemployment news?

Today I attended my very first AGM. I got to experience first hand how it feels like being a shareholder. It’s a very good exposure for me. I was given some door gifts. We were served light refreshments before and after the AGM.

By my count, there were no more than 30 shareholders plus proxies who attended the AGM. Not many questions were asked during the AGM. And the resolutions were passed fairly quickly. The management did give some good answers to the questions asked. But overall, the quality of the questions asked were somewhat poor. I wish next year there will be a shareholder activist in the AGM.

After the AGM, I had the chance to talked to a few other shareholders and the Directors. The time spent talking with the Directors were great. I was able to learn more about the company in less than one hour than I had in the last few weeks searching for information about the company.

The KLCI shed 1.6% today. Haven’t seen such a huge drop for a while. Shanghai shed almost 6%. Has fear and panic crept back into the market? Reminds me of “the cycle of market emotions” I’ve read about in the July 2009 newsletter by HSBC.

What goes up, must come down. What goes down, must come up.

Be like Warren Buffett. Be greedy when people become fearful. And sell when people become greedy. This is the smart way to invest. Making buy sell decisions based on logic.

But instead of this common sense way, people usually get caught up in the market emotions. When everybody is greedy, they become greedy as welland usually end up buying overpriced assets. When everybody panic and sell, they become panicky too and sell at a distressed price, usually undervalued.

In summary, we have to look at the market and see what everybody else are doing. And sometimes it may be more profitable to bet against the herd.