Bloomberg put up a rather great summary of where you might want to keep your money during December, given that there’s an expectation of a Santa Rally. This post doesn’t constitute an investment recommendation by any means, but it’s somewhat in the spirit of the CLSA annual forecasts that they do at the start of every Chinese New Year, trying to evaluate how traditional mysticism might influence the stock market and which developments to at least look out for. My mysticism of choice is uncertain statistics, technical analysis and recent trends to get you through the next month and hoping to follow up with the first quarter of 2015 in East Asian markets by providing a little insight and not a single investment idea worth putting money in.
Looking over the Asian markets we have here, there’s Taiwan, South Korea, Japan, Australia and India. India is not a market I am too familiar with, and same thing more or less goes to Australia. This is however compensated for by Hong Kong posting average December gains of 3.7%!
This time I will aim to involve you readers a bit more in the forecasting fun and really hope to hear your expectations for the markets I discuss here. I really appreciate any comments coming my way, and will gladly repost / reblog / feature some people, either by the strength of the discussion you bring out or by how accurate your forecasts are. At the start of the new year, I aim to publish a post with the best forecasts across the markets I track, the best total forecasts by one poster, and honorable mentions for markets I am not looking at within the first week of January. The scoring will run as follows, with the rules being the same as in golf – lowest number wins!
Single forecasts: [ln(prediction/actual)]^2 / [Days to December 31st]^2
Multiple forecasts total: [Sum of Single Forecasts scores] / [N × ln(1 + N/3)]
N = number of forecasts. To qualify for multiple scoring, one needs to provide at least 3 year-end forecasts. Thus the maximum marginal advantage conferred on guessing one more contract is 22% (by offering four predictions rather than three) but those offering ten predictions will get roughly double the leeway on their average accuracy versus those offering only three! Post many forecasts to discuss, but don’t spit out so many that I’d think you threw darts at a board!
The single forecast formula is done to premier early forecasting. It will get easier to guess by a square root of remaining time, so I have to penalize the late forecasts a lot to promote you guys to comment early so that there is something to discuss. The way the formula is currently written means that scoring should get harder by the square root of time. Forecasts today will have a four-times advantage on forecasts given Tuesday December 16th, and 16 times to those forecasts given Wednesday December 24th!
Let’s get started after the jump, so you get this before all the gains are gone!