Recent thoughts on the rally in the world markets

Malaysia has underperformed the recent rally to much avail. While markets in the US have rebounded nicely, why hasn't Malaysia done so?

The short answer is that the market is extremely illiquid. Malaysia has a very anemic stock market due to the investors generally shunning Malaysia as there are more vibrant markets in the world. It will take nothing short of genius for the world to see Malaysia as a fantastic place to invest. Clearing red tape is not enough. I'm talking about doing something really innovative for Malaysia to be a fantastic place to invest again.

But do not despair at the current market rally. It is a bear market rally. People are jumping the gun at thinking the economy will see the bottom. We have seen the explosions and smoke coming from the volcano, but the lava has yet to flow all the way down. Unemployment will continue to increase in the US. GDP will remain negative for this whole year as nonresidential investment gets trashed (it hasn't yet as long projects are still being completed). And if we get growth, it will be slow. It won't make up for inflation.

We are only some 9 months into this bear market. The stock markets only started collapsing about summer of last year. This bear market is being billed as one of the biggest recessions of all time so I think recovering in 9 months is slim. The odds look in favor of another bear market downturn off this rally.