12 months chart: AUD advancing @ 0.69 on USD.
Monday, December 29, 2008
Tuesday, December 23, 2008
Something To Remember In The New Year
Finding A Friend In The Trend
“The trend is your friend” is an important trading guideline.
In 2008 we witnessed some massive bear trends in the equity and crude oil markets as well as many other freely traded commodities and currencies.
Because trends persist for long periods, a position taken with the trend will more likely be successful than one taken randomly or against the trend. Trading with the trend in a bull market means buying on dips; in a bear market, selling on rallies.
This is a good lesson to remember on why markets trend. Are we expecting some big trends in 2009? You bet we are. Look for big trends in gold, the dollar and crude oil in the new year.
By Adam Hewison
Read more under "Lesson for Professional Trader" on right colum of this blog.
“The trend is your friend” is an important trading guideline.
In 2008 we witnessed some massive bear trends in the equity and crude oil markets as well as many other freely traded commodities and currencies.
Because trends persist for long periods, a position taken with the trend will more likely be successful than one taken randomly or against the trend. Trading with the trend in a bull market means buying on dips; in a bear market, selling on rallies.
This is a good lesson to remember on why markets trend. Are we expecting some big trends in 2009? You bet we are. Look for big trends in gold, the dollar and crude oil in the new year.
By Adam Hewison
Read more under "Lesson for Professional Trader" on right colum of this blog.
Monday, December 22, 2008
GOLD IN TERMS OF WHAT YOU CAN BURN AND EAT
Most folks believe gold has performed terribly this year. Gold's "underperformance" is unexpected, considering it normally soars when a big pile of you-know-what hits the fan.
Most folks look at gold in terms of U.S. dollars. But that doesn't give you the whole picture. Today, let's look at gold in terms of how much gasoline, cereal, bread, heating oil, hamburger, coffee, and construction materials it will buy you. Let's look at gold versus the "CRB."
The CRB Index is like the "Dow Industrials" of commodity prices. It's the world's most widely followed gauge of raw materials like oil, copper, and corn. As you can see from today's chart, when you look at gold in terms of things you actually eat, burn as fuel, or live in, gold is soaring. We stand by our claim: The bull market in gold is alive and well...! Brian Hunt's market Notes.
GOLD IS SOARING, YOU JUST DON'T REALIZE IT
We're devoting an entire week to showing you some amazing gold charts...
You might have watched gold fall from a high around $1,000 to below $725 and wondered what the heck was going on. Gold is known as a "crisis hedge"... an asset that soars when stocks, bonds, and the economy are performing terribly. The confusing thing is, investors have had a lifetime of crisis thrown their way in 2008, but gold has actually declined in price, right?
Actually, wrong. Yes, gold is down more than $170 an ounce from its summer highs. But that's when you measure it in U.S. dollars. Problem is, many folks around the world measure gold in different terms. Take the 300 million Europeans who use the euro as their currency.
Today's chart is the price of gold measured in euros. As you can see, gold is strong in the eyes of a European. Currencies tend to fall when their home economies weaken... when there aren't enough jobs or when folks get into too much debt. This is what's happening in Europe. The bull market in gold is alive and well... Brian Hunt's Market Notes.
Yen Falls Versus Euro, Dollar on Record Drop in Japan’s Exports
Dec. 22 (Bloomberg) -- The yen weakened against the euro and the dollar as a record plunge in Japanese exports last month signaled the world’s second-largest economy was falling deeper into a recession.
The ruble fell to the lowest level against the dollar in almost three years as Russia devalued the currency and tumbling oil prices this year battered its economy. The dollar weakened against the euro before data this week forecast to show U.S. consumer spending and durable goods orders declined.
“When Japan’s trade performance deteriorates, the yen tends to weaken,” said Shaun Osborne, chief currency strategist in Toronto at TD Securities Inc., a unit of Canada’s second- largest bank. “Japan’s growth outlook is concerning.”
The yen dropped 1.1 percent to 125.60 per euro at 9:36 a.m. in New York, from 124.22 on Dec. 19, paring its gain this year to 30 percent. The yen depreciated 0.5 percent to 89.74 per dollar from 89.31 and reached 90.23, the weakest level since Dec. 16. The yen may decline to 102 per dollar by the end of 2009, according to Osborne. The dollar weakened 0.6 percent to $1.3994 per euro from $1.3912. It slid to $1.4719 on Dec. 18, the weakest level since Sept. 25.
Bank of Japan Governor Masaaki Shirakawa said today the nation’s exports may decline further because of the yen’s strength this year and the global slowdown. Toyota Motor Corp., the world’s second-largest automaker, said it expects its first operating loss in 71 years because of plunging North American and European car sales and a surging yen.
“ I am surprised the Japanese hasn’t intervened thus far,” said Dennis Gartman, economist and editor of the Gartman Letter in Suffolk, Virginia, in an interview on Bloomberg Radio. “Intervention to weaken your currency can be very effective. There’s a great probability that the yen versus the dollar will trade at 100 to 105 over the course of the next year.”
The most volatile foreign-exchange markets since at least 1992 means currency traders will see the smallest pay cuts as the worst financial crisis since the Great Depression wipes out bonuses on Wall Street.
Sunday, December 21, 2008
When To Buy: Part 2
3 months chart Dollar Index DX shows a slight dip to 81 while a 4 days chart shows USD strengthen against JPY at 90. If DX continues to fall but with USD rallying against the JPY, we should see a further rise in gold prices, commodities currencies and equities.
Gold is seen trading between US750 to 850 range in last 4 months.
Here's an article related to Carry Trade.
Yen Falls as Carmaker Loans Revive Confidence in Carry Trades By Ron Harui and Stanley White
Dec. 22 (Bloomberg) -- The yen fell against the euro, extending this month’s decline, as U.S. government aid to General Motors Corp. and Chrysler LLC gave investors confidence to boost holdings of higher-yielding assets funded in Japan.
The Japanese currency also dropped versus the dollar on speculation Bank of Japan Governor Masaaki Shirakawa will express concern over the yen’s gains following a record plunge in exports in November. The dollar weakened against the euro before data this week that may show U.S. consumer spending, home sales and durable goods orders fell.
“GM and Chrysler have won a reprieve for the remainder of this year,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “This is pushing the yen a little bit lower.”
The yen dropped 1.3 percent to 125.78 per euro at 1:53 p.m. in Tokyo from 124.22 on Dec. 19, paring its gain this year to 30 percent. The currency declined to 89.99 against the dollar from 89.31 late last week. It reached 90.23, the lowest level since Dec. 16. The dollar weakened to $1.3972 per euro from $1.3912. It slid to an 11-week low of $1.4719 on Dec. 18.
Investors added to so-called carry trades, in which they get funds in a country with low borrowing costs and buy assets in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency market moves erase those profits. Japan’s benchmark interest rate is 0.1 percent, compared with 2.5 percent in the 15-nation euro region, 4.25 percent in Australia and 5 percent in New Zealand.
The yen has appreciated 24 percent against the dollar this year, the most since 1987, as more than $1 trillion of credit- market losses sparked a seizure in money markets and threw the world’s largest economy into a recession.
“The bias is for the dollar to go lower,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “U.S. economic data are likely to confirm just how bad the outlook is.”
The U.S. currency has gained 4.4 percent against the euro this year, 33 percent versus the British pound and 28 percent against the Australian dollar as investors bought the greenback to flee riskier assets and repay dollar-denominated loans from lenders reining in credit.
Friday, December 19, 2008
Currencies Play:AUD & KRW
AUD = 2.46 MYR (11% gain from lowest 2.21 on 21st Nov).
KRW = 2.69 MYR (13% gain from lowest 2.39 on 21st Nov).
USD = 3.46 MYR (5% loss from highest 3.64 on 3rd Dec).
Meaning you would have made a gain/yield of 11% if you had bought KRW and AUD at its recent low.
USD/JPY Slides
Chart 1: US Dollar Index (DX) has rebounded slightly from 77 to 81.
Chart 2: USD/JPY plunges to 89.
CRB Index still hovering around 220. Commodity is inversely correlated to Dollar Index. Let's see how it reacts in the next week...
Thursday, December 18, 2008
When is The Right Time To Buy
Blogger Salvatore Dali's posting:
A reflection of risk aversion = cheap valuations of stocks (forced sale/liquidation).
A sure sign of risk aversion = the rush of money to US Treasuries.
A sign of definite risk aversions = the rush of money to USD and JPY.
#1: Markets will only start a genuine recovery when risk aversion subsides
#2: Risk aversion reduction will be immediately reflected in weaker USD and yen.
The fall in USD over the last two days is more due to the zero interest rate regime enacted by Federal Reserve, so that should not be a sign of risk aversion reduction.
The best guide for locating current markets' bottom:
WHEN USD and YEN BOTH STARTS TO FALL IN VALUE in a sustained pattern. It signal a willingness to move exposure into other currencies or assets, be it stock or bonds.
Dali's buying trigger:
Catalyst #1: When yen/usd rate moves back to 94, plonk down 1/3 of your funds
Catalyst #2: When the rate moves to 97, move the second portion
Catalyst #3: When the rate breaks 100, move the rest in
In essence, I think this is what Dali is saying:- both the USD and JPY must weaken (against other related currencies), but JPY must go depreciate more for "carry-trade" to take place.
In other words,
1) money flows out of US market into emerging markets (sell USD to buy emerging markets currencies and assets),
2) JPY to becomes cheap enough for fund-houses to borrow for buying into emerging markets currencies and stocks with better yields).
I have a strong tendency to agree fully with the direction Dali is pointing. I usually observe the Dollar Index but now with the indicated USD/JPY figures offered by Dali, we can now position ourselves better to seize the opportunity.
To all, Merry Christmas...!
A reflection of risk aversion = cheap valuations of stocks (forced sale/liquidation).
A sure sign of risk aversion = the rush of money to US Treasuries.
A sign of definite risk aversions = the rush of money to USD and JPY.
#1: Markets will only start a genuine recovery when risk aversion subsides
#2: Risk aversion reduction will be immediately reflected in weaker USD and yen.
The fall in USD over the last two days is more due to the zero interest rate regime enacted by Federal Reserve, so that should not be a sign of risk aversion reduction.
The best guide for locating current markets' bottom:
WHEN USD and YEN BOTH STARTS TO FALL IN VALUE in a sustained pattern. It signal a willingness to move exposure into other currencies or assets, be it stock or bonds.
Dali's buying trigger:
Catalyst #1: When yen/usd rate moves back to 94, plonk down 1/3 of your funds
Catalyst #2: When the rate moves to 97, move the second portion
Catalyst #3: When the rate breaks 100, move the rest in
In essence, I think this is what Dali is saying:- both the USD and JPY must weaken (against other related currencies), but JPY must go depreciate more for "carry-trade" to take place.
In other words,
1) money flows out of US market into emerging markets (sell USD to buy emerging markets currencies and assets),
2) JPY to becomes cheap enough for fund-houses to borrow for buying into emerging markets currencies and stocks with better yields).
I have a strong tendency to agree fully with the direction Dali is pointing. I usually observe the Dollar Index but now with the indicated USD/JPY figures offered by Dali, we can now position ourselves better to seize the opportunity.
To all, Merry Christmas...!
Thursday, December 11, 2008
Why You Must Immediately Bet on Inflation
Last week, the Fed took its first step in a new, more desperate tactic to fix the financial system...Up until last week, the Fed's operations since the beginning of the credit crunch had not created any new money supply. It had been swapping troubled assets on bank balance sheets for Treasury bonds. It was taking bad loans off banks' books and giving them good loans instead.That improves a bank's balance sheet... and strengthens the system. But it creates no additional credit. It's not inflation.Then, last week, it took a "quantum leap," according to George Goncalves, the chief Treasury and agency strategist at Morgan Stanley.
Instead of swapping assets in the banking system, the Fed started buying them. The Fed bought $5 billion of Freddie Mac, Fannie Mae, and Federal Home Loan Bank corporate debt. The New York Fed's website says the purchases are being "financed through the creation of additional bank reserves." The Fed has finally started to create money out of thin air.In other words, to pay for its purchases, the Fed opened new bank accounts for its commercial bank customers, struck a couple of computer keys, and filled the accounts with money. The Fed hopes the banks lend this money out. If they do, it will add credit to the marketplace... That's inflation.The idea behind this new strategy is to help homeowners refinance their debts at lower interest rates. A purchase of $5 billion is a tiny amount for the Fed, but think of it as a test. The Fed wanted to make sure the market wouldn't flip out over this new ultra-inflationary strategy.The market didn't flip out. And the strategy worked. The average rate on a 30-year fixed-rate mortgage fell from 5.97% to 5.53%... the largest weekly drop in 27 years.Now that the Fed sees how successful this strategy was, we can expect the government to continue with it. This is great news if you own investments that respond well to inflation, like gold, silver, and other commodities. First, the public is 100% sold on the idea of imminent deflation. Commodities and gold are selling at bargain prices. In the markets, it pays to bet on the underdog.
Second, there's no political resistance to inflation. The dollar is in its strongest uptrend this decade, and Treasury rates are at all-time lows. There's no reason for the government not to inflate. There's no economic penalty for running an inflationary policy. Plus, the public is demanding stimulus and bailouts right now. They're giving politicians the green light to create money.Finally, over $8 trillion is sitting on the sidelines in money market accounts and short-term Treasuries. Meanwhile, some unknown trillions have disappeared from the world's supply of assets in the credit crunch. When the supply of money and credit expand in relation to the supply of goods and services, you get inflation.The easiest way to bet on inflation is with an exchange-traded fund like GDX. It's an index of the biggest gold-mining stocks. If the stock market rallies at the same time gold rallies – which should happen when inflation hits – GDX will rise like a rocket.
Good investing- Tom Dyson, contributor to Daily Wealth.
Instead of swapping assets in the banking system, the Fed started buying them. The Fed bought $5 billion of Freddie Mac, Fannie Mae, and Federal Home Loan Bank corporate debt. The New York Fed's website says the purchases are being "financed through the creation of additional bank reserves." The Fed has finally started to create money out of thin air.In other words, to pay for its purchases, the Fed opened new bank accounts for its commercial bank customers, struck a couple of computer keys, and filled the accounts with money. The Fed hopes the banks lend this money out. If they do, it will add credit to the marketplace... That's inflation.The idea behind this new strategy is to help homeowners refinance their debts at lower interest rates. A purchase of $5 billion is a tiny amount for the Fed, but think of it as a test. The Fed wanted to make sure the market wouldn't flip out over this new ultra-inflationary strategy.The market didn't flip out. And the strategy worked. The average rate on a 30-year fixed-rate mortgage fell from 5.97% to 5.53%... the largest weekly drop in 27 years.Now that the Fed sees how successful this strategy was, we can expect the government to continue with it. This is great news if you own investments that respond well to inflation, like gold, silver, and other commodities. First, the public is 100% sold on the idea of imminent deflation. Commodities and gold are selling at bargain prices. In the markets, it pays to bet on the underdog.
Second, there's no political resistance to inflation. The dollar is in its strongest uptrend this decade, and Treasury rates are at all-time lows. There's no reason for the government not to inflate. There's no economic penalty for running an inflationary policy. Plus, the public is demanding stimulus and bailouts right now. They're giving politicians the green light to create money.Finally, over $8 trillion is sitting on the sidelines in money market accounts and short-term Treasuries. Meanwhile, some unknown trillions have disappeared from the world's supply of assets in the credit crunch. When the supply of money and credit expand in relation to the supply of goods and services, you get inflation.The easiest way to bet on inflation is with an exchange-traded fund like GDX. It's an index of the biggest gold-mining stocks. If the stock market rallies at the same time gold rallies – which should happen when inflation hits – GDX will rise like a rocket.
Good investing- Tom Dyson, contributor to Daily Wealth.
Gold, Precious Metals, Crude Oil, Commodities Currencies
Gold, Precious Metals, Crude Oil, Commodities Currencies to Soar:
In the currency markets, the U.S. dollar fell against most major currencies, but rose against the Japanese yen, as progress toward a $15-billion federal bailout for the nation's auto industry buoyed risk appetite among investors
If USD continues to weaken, gold and crude oil will again rise. Gold typically is seen as a hedge against inflation and may also be a storage of value against deflation. With the current destruction of wealth/value in all paper assets and deflating prices in commodity, gold will be seen as safe haven.. Watch precious metals soar...
If JPY start weakening against major currencies, we will see "carry-trade" funds buying into the equities of emerging markets. Watch all commodity currencies and Australia stocks movement...
Plan your move and you could be rewarded...
In the currency markets, the U.S. dollar fell against most major currencies, but rose against the Japanese yen, as progress toward a $15-billion federal bailout for the nation's auto industry buoyed risk appetite among investors
If USD continues to weaken, gold and crude oil will again rise. Gold typically is seen as a hedge against inflation and may also be a storage of value against deflation. With the current destruction of wealth/value in all paper assets and deflating prices in commodity, gold will be seen as safe haven.. Watch precious metals soar...
If JPY start weakening against major currencies, we will see "carry-trade" funds buying into the equities of emerging markets. Watch all commodity currencies and Australia stocks movement...
Plan your move and you could be rewarded...
Wednesday, December 10, 2008
Gold Rises on Weak USD Index
12 months and 3 months USD Index charts: The dollar index rally past 88 on 20th November but has since dropped to 85 today. Looks like we're going to see USD weakening (against a basket of related currencies strengthening) in next few months.. Let's see how the Ringgit and AUD move in the next few days..
Dollar weakness typically boosts dollar-denominated commodities such as gold.
Spot gold on a 5 days chart indicate a rise from $760 to $815 (7.2%) in just over 3 days.
CRB Reuters dropped from a high of 476 on 3rd July to a low of 215 on 10th December. It rose to 221 (1.6%) on 11th December. We will see a rally in Crude Oil..
DJIA RECOVERY
Has anyone realised that DJIA has managed to climb almost 15% from its lowest in period of six weeks.? I know there is no reason to be rejoicing yet but the worst may be over. Governments all over the globe are intervening financially to ensure that their economies do not come to a standstill.
I am not advocating that you must buy and hold stocks now. I am saying there may be much more bad news to come but the downtrend of the markets may be limited with intervention from all agencies. Just watch how the DJIA reacts to more adverse news and response to more financial aids.
Saturday, December 6, 2008
How to Spot the Signs of a Recovery from Economic Recession
People asked me when the economic and financial market will recover. I know it will and but it may not be soon. Here's an article that offers some telling signs of a recovery: for our reading pleasure from http://www.ehow.com/
When will the US and global economy recover from this recession? Many people think it won't be for one or two years. How will you know when the recovery has started?
Step1. This is an obvious one: watch the real estate market. Sub-prime lending is what started this recession, and that same market will start showing when recovery is imminent. Homeowners will see their home values start to go up in annual assessments. As the market stabilizes, less houses will be for sale as foreclosed homes are purchased with conforming loans. Watch for a sharp decrease in "For Sale" signs in your neighborhood.
Step2. Gas prices can be a strong indicator of recovery, but perhaps not in the way you think! Gas prices dropped 40 cents or more in September, and the price will continue to go down as the economy weakens. American's "can't afford" gasoline right now--demand has gone down and price has followed. Watch the news and gas prices. Once prices start to rise again, it is a sign the economy is growing stronger because demand for gas (and money to spend on it!) is growing as well. However, there are a lot of other factors that affect the price--bans on sale of crude oil, offshore drilling, international conflicts, etc. Watch for gas prices to rise not as a result of some external unrelated reason.
Step3. This recession started with the credit industry, so it isn't a surprise that it's an area to watch. Credit has tightened alarmingly in recent months, which mirrors our economic situation. Watch for a loosening of credit availability. Bailouts and improvements in the banking industry will eventually lead to the ability to give out more credit under less strict terms. Watch for the appearance of lower rate, more accessible credit in credit cards, mortgages, automobile, and especially unsecured loans. The easier it is to secure credit, the better the economy is doing because people are spending, spending, spending and that pumps money into the economy.
Step4. The unemployment rate is higher than 6%, and has been on the rise as employers can't afford to hire on more employees. The job market and unemployment are key indicators of economic stability. People with jobs spend money and strengthen the economy. Watch for the unemployment rate to drop instead of rise. Jobs will start to become more available as the economy starts to recovers. If the unemployment rate sharply declines, it is a sure sign that recession is coming to a soon end.
Step5. Finally, watch the global economy as the US will most likely mirror what's happening worldwide. When this all started, the US was hit by recession and the world market soon followed. In that same manner, the global economy will recover faster than America since it wasn't hit as hard as the US itself. So, watch for the market in Europe and Asia to recover and the US will be sure to follow.
"Prosperity has and always will return again" - JD Rockefeller
When will the US and global economy recover from this recession? Many people think it won't be for one or two years. How will you know when the recovery has started?
Step1. This is an obvious one: watch the real estate market. Sub-prime lending is what started this recession, and that same market will start showing when recovery is imminent. Homeowners will see their home values start to go up in annual assessments. As the market stabilizes, less houses will be for sale as foreclosed homes are purchased with conforming loans. Watch for a sharp decrease in "For Sale" signs in your neighborhood.
Step2. Gas prices can be a strong indicator of recovery, but perhaps not in the way you think! Gas prices dropped 40 cents or more in September, and the price will continue to go down as the economy weakens. American's "can't afford" gasoline right now--demand has gone down and price has followed. Watch the news and gas prices. Once prices start to rise again, it is a sign the economy is growing stronger because demand for gas (and money to spend on it!) is growing as well. However, there are a lot of other factors that affect the price--bans on sale of crude oil, offshore drilling, international conflicts, etc. Watch for gas prices to rise not as a result of some external unrelated reason.
Step3. This recession started with the credit industry, so it isn't a surprise that it's an area to watch. Credit has tightened alarmingly in recent months, which mirrors our economic situation. Watch for a loosening of credit availability. Bailouts and improvements in the banking industry will eventually lead to the ability to give out more credit under less strict terms. Watch for the appearance of lower rate, more accessible credit in credit cards, mortgages, automobile, and especially unsecured loans. The easier it is to secure credit, the better the economy is doing because people are spending, spending, spending and that pumps money into the economy.
Step4. The unemployment rate is higher than 6%, and has been on the rise as employers can't afford to hire on more employees. The job market and unemployment are key indicators of economic stability. People with jobs spend money and strengthen the economy. Watch for the unemployment rate to drop instead of rise. Jobs will start to become more available as the economy starts to recovers. If the unemployment rate sharply declines, it is a sure sign that recession is coming to a soon end.
Step5. Finally, watch the global economy as the US will most likely mirror what's happening worldwide. When this all started, the US was hit by recession and the world market soon followed. In that same manner, the global economy will recover faster than America since it wasn't hit as hard as the US itself. So, watch for the market in Europe and Asia to recover and the US will be sure to follow.
"Prosperity has and always will return again" - JD Rockefeller
Friday, December 5, 2008
THE GAME PLAN: WAIT
Good opportunities will come at some point next year and we want to be ready to take a position to make a lot of money at that time.
We may be currently trading a winner in and out on a bear rally in the year ending or on some window dressing activity. I suggest we take profit and put it back in our cash chest. If we must trade, use only 20% of our cash chest. Losing money now is foolish and we'll forgo that opportunity for better rewards next year. This is the season we need to wait for something to come along that we know is right.
In the meantime, educate ourselves about broader market trends and trading patterns so that we will be in a position to gain more the next time real opportunities does come. The fortune that comes to those of us willing to to invest time and effort in will be enormous.
THE GAME PLAN: MARKET DIRECTION
For my investing friends:
Some financial experts will emerge and tell you that they can make big gains for you right now and yes, even in this market situation. I would be wary of these claims- the market is in terrible shape. The probability of losing is greater by three to one.!
You may have made some money from some dumb luck but without a consistent strategy in investment, you may have or will probably lose it. Honestly, ask yourself this question:- if you want to continue making money, what would be a good way of doing it..
Some financial experts will emerge and tell you that they can make big gains for you right now and yes, even in this market situation. I would be wary of these claims- the market is in terrible shape. The probability of losing is greater by three to one.!
You may have made some money from some dumb luck but without a consistent strategy in investment, you may have or will probably lose it. Honestly, ask yourself this question:- if you want to continue making money, what would be a good way of doing it..
A simple answer - in a market downtrend, preserve your capital in cash and wait. If you have to wait months then wait and do nothing except to observe direction of the market. Only take an investment position that aligned yourself with the broad uptrend of the market. This necessary low risk/high reward position to will put you in best position to make money.
The best way to make money is to be in a position to buy stocks near the start of the next bull market. In this manner you manage your risk to make sure you never have big losses ever again.
Jim Rogers, a former partner of George Soros the most successful hedge funds manager is quoted as saying:
"One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people - not that I'm better than most people - always have to be playing; they always have to be doing something. They make a big play and say, "Boy I am smart, I tripled my money." Then they rush out and have to do something else with that money. They can't just sit there and wait for something new to develop."
Thursday, December 4, 2008
THE GAME PLAN: BUY TO SELL
Dedicated to my ex-colleague:
Recently I bumped into an ex-colleague who remarked how his investment in a list of unit trust funds has caused him an unrealised loss of RM100,000 on top of losses suffered at the stock market. Yes I do invest a small sum of money in the unit trust fund and my scrutiny today reveals a depreciation of 38% over a year.
Many people are losing a lot of money in this bear market. This friend is one of the many who is sitting on an enormous loss on his portfolio of stocks & unit trust funds and are confused at what he should do.
He started accumulating stocks and mutual funds units last year on the advice of some financial consultant. He had hope that the advice of "BUY & HOLD" would bear fruit but is now aware of the futility that comes with such, in a down-trodden market.
It's not a small amount. Assuming RM100,000 loss = 38%, he must have invested RM260,000 in unit trust funds alone. I don't know how much he is invested in stocks.
I don't know if it's better to to swap trust fund units to stock shares or vice versa. Or to relocate to better performing sectors, or ultra-depressed equities in the stock markets in the hope of a quicker recovery and jump in their price. In this bear market, all mutual funds prices, virtually every stock in all sectors are in decline.
- What I do know is that monetary loss is part of the game. What I do know is that when he does sell at a loss, he does not have to reinvest immediately for fear of missing out of a rally.
- What I do know is that unrealised loss (paper loss) is same loss as the loss of money in your hand or in your account. The monetary value is the same, in your trust fund, stocks or cash or account.
- What I do know is to be in cash at the moment. I begin selling since mid-May, took profits on some positions and cut losses in some. Since then I did many intraday and contra trades that yielded little. This is a hostile market that respects no fundamental or technical analysis but thrives on volatility.
- Stay away from investing (BUY & HOLD) strategy in this uncertain market. Stay away from the invisible market forces at work at the moment that seek only to confuse you. If you must, trade intraday, contra and cut losses early before it turn huge.
- What I do know is to sit on cash. Cash is going to be the best performer of the year. It's going to allow you to buy stocks, units at the near of a fresh bull market. For now I cannot see anything worth investing or buy & hold.
- Market has fallen so much that it is more difficult for people to sell their stocks and funds now. Market will favour a temporary rebound against the overall trend but it's not going to be the next bull.
- What I do know is I buy to sell. I'm not against the buy and hold strategy which has its place in a uptrend market. Knowing when to sell is the most important discipline in making money in the stock market.
They almost never advise you to take a loss when something goes against you. It is a dis-service to both the investor and themselves. They don't always have a game plan; when to sell if you buy. They are just making naive people lose money. My friend learned this the hard way.
I have no doubt my friend will recoup his losses when the economic and financial situation turns in his favour. After all he paid his dues and learnt the most important discipline in investment and trading.
Gold Will Rise to $2,000 by 2010
Precious metal remains my favourite play for past years and will continue to perform inspite of correction along the way. Read the following comments:
The price of gold is set to rally to $2,000 per ounce next year as an improvement in the economic outlook causes fear of inflation and currency debasement, Philip Manduca, head of investment from ECU Group, told CNBC.
"Gold will be going through $1,000 very shortly in 2009, and go on to as high as $2,000 by 2010 and I'm very confident of those predictions," Manduca told "Worldwide Exchange."
The economy will show signs of a bounce in the coming months because of the amount of monetary and fiscal stimulus and improving optimism from investors and consumers, Manduca said.
"People just want to believe that it's going to come to an end someday soon, preferably tomorrow," he added.
When the state of the economy appears to have improved, investors will get "very real fears of a combination of currency debasement on the one hand and ... inflation on the other," Manduca said.
Dean Barber, founder & chief investment officer at Barber Financial Group agreed with Manduca's predictions and said the entire commodity space was set to do well next year.
The price of gold is set to rally to $2,000 per ounce next year as an improvement in the economic outlook causes fear of inflation and currency debasement, Philip Manduca, head of investment from ECU Group, told CNBC.
"Gold will be going through $1,000 very shortly in 2009, and go on to as high as $2,000 by 2010 and I'm very confident of those predictions," Manduca told "Worldwide Exchange."
The economy will show signs of a bounce in the coming months because of the amount of monetary and fiscal stimulus and improving optimism from investors and consumers, Manduca said.
"People just want to believe that it's going to come to an end someday soon, preferably tomorrow," he added.
When the state of the economy appears to have improved, investors will get "very real fears of a combination of currency debasement on the one hand and ... inflation on the other," Manduca said.
Dean Barber, founder & chief investment officer at Barber Financial Group agreed with Manduca's predictions and said the entire commodity space was set to do well next year.
Wednesday, December 3, 2008
Tough Times
Datuk Mohamed Azman Yahya said the current crisis may be more challenging for Malaysia than the economic crisis it faced in 1998 as the economy faces the risk of stagflation where growth slows down amid a high-cost environment.
"From an economist's standpoint this is probably one of the worst positions to be in. More worrying is that this is today a global phenomenon. From a policy response this is tricky - too much stimulus either fiscal or monetary may lead to inflationary pressures, too little may lead to a recession," Azman who is a member of the recently set up Economic Council said.Malaysia is also facing challenges in general competitiveness, especially because of its long over-dependence on cheap foreign labour.
"This is very dangerous because there will always be some country somewhere that will be cheaper, and once these countries sort out their legal and infrastructure issues, they will be more competitive. We have to be more forceful in changing the drivers to our economy," Azman said.He said Malaysia must adopt a measured approach to increase wages and productivity while keeping a watch on inflation.
He also observed a generally pessimistic sentiment and low consumer confidence and said that widespread belt tightening measures will affect the velocity of money and the domestic economy. In the current weakened global economy Azman believes that the export-based manufacturing and commodity sectors will be most affected, as global demands contract. "This in turn may affect the SMEs that rely on these sectors. At the same time, the property sector, which normally does well when wealth is created (either through earnings or stock market) and was, over the last few years fuelled by foreign buying, will also be affected," he added.
Likewise, consumption of non-necessities such as motor vehicles and some retail goods may also be adversely affected.
"From an economist's standpoint this is probably one of the worst positions to be in. More worrying is that this is today a global phenomenon. From a policy response this is tricky - too much stimulus either fiscal or monetary may lead to inflationary pressures, too little may lead to a recession," Azman who is a member of the recently set up Economic Council said.Malaysia is also facing challenges in general competitiveness, especially because of its long over-dependence on cheap foreign labour.
"This is very dangerous because there will always be some country somewhere that will be cheaper, and once these countries sort out their legal and infrastructure issues, they will be more competitive. We have to be more forceful in changing the drivers to our economy," Azman said.He said Malaysia must adopt a measured approach to increase wages and productivity while keeping a watch on inflation.
He also observed a generally pessimistic sentiment and low consumer confidence and said that widespread belt tightening measures will affect the velocity of money and the domestic economy. In the current weakened global economy Azman believes that the export-based manufacturing and commodity sectors will be most affected, as global demands contract. "This in turn may affect the SMEs that rely on these sectors. At the same time, the property sector, which normally does well when wealth is created (either through earnings or stock market) and was, over the last few years fuelled by foreign buying, will also be affected," he added.
Likewise, consumption of non-necessities such as motor vehicles and some retail goods may also be adversely affected.
Tuesday, December 2, 2008
Australian Commodity Stocks Play
For those with an interest on Aussie stocks, check out how much BHP Billiton, Rio Tinto and MacArthur had plunged...
BHP fallen from AUD48 to AUD 24, Rio from AUD150 to AUD40, MacArthur AUD20 to AUD4.
Potential play in 1H 2009.
Monday, December 1, 2008
Gold Investment
Gold has fallen 30% in 8 months from a high of USD 1002 to about USD 766 as global slump curtails comm0dity use of metals; basic and precious.
Silver plunged almost 50% in the same period from USD 20 to about USD 9 while platinum dropped 65% from USD 2300 to USD 800.
The Reuters/Jefferies CRB Index of 19 raw materials has dropped 35 percent this year. Commodities often move in the opposite direction of the U.S. currency.
Australia Cut Key Interest Rate
Australia's central bank slashed its key interest rate Monday a full percentage point to 4.25 percent as it tries to prevent the economy from contracting. The global financial crisis has taken Australia's economy from boom times to the verge of recession in a matter of months, and policymakers are throwing billions of dollars at the economy to try to stop it from tipping over the edge. Australia's S&P/ASX 200 index was down 3.2 percent at 3,564.
Markets in the Philippines, Taiwan and South Korea also dropped.
Among major regional markets, only Singapore and mainland China rose.
Markets in the Philippines, Taiwan and South Korea also dropped.
Among major regional markets, only Singapore and mainland China rose.
Ringgit could recover in 2H09
KUALA LUMPUR: The ringgit, which is expected to trade weaker going into 2009, will likely stage a recovery during the second half of the year, analysts said.
ECM Libra Investment Bank Bhd economist Dr Lai Mun Chow said the currency should reverse its decline against the US dollar in the second half, but until then it was expected to trade between 3.50 and 3.60 against the greenback.
“Based on our forecast, the credit crunch in the United States would come to an end by the middle of next year and the largest economy in the world would gradually recover by then,” he said.
“As foreign funds return to Asia, we would see the substantially undervalued ringgit resuming its upward trend from 3Q09,” Lai said. His end-2009 forecast for the ringgit is 3.25 to 3.27 against the US dollar.
While most analysts expect more rate cuts in the first quarter of 2009 and a weaker ringgit as a result, Lai believed the movement of the overnight policy rate was only material to the local unit if the global foreign exchange market returned to stability.
“If the United States really slips into a very deep recession and the China economy undergoes a hard landing, the Malaysian economy will definitely not be spared the adverse effects,” Lai said.
“In order to support the ringgit, it is crucial that the central bank maintains the growth momentum of the economy and ensure that it would not slip into recession.”
The ringgit closed 0.11% lower against the US dollar at 3.6235 on Friday. Year to date, the currency has fallen 8.53%.
ECM Libra Investment Bank Bhd economist Dr Lai Mun Chow said the currency should reverse its decline against the US dollar in the second half, but until then it was expected to trade between 3.50 and 3.60 against the greenback.
“Based on our forecast, the credit crunch in the United States would come to an end by the middle of next year and the largest economy in the world would gradually recover by then,” he said.
“As foreign funds return to Asia, we would see the substantially undervalued ringgit resuming its upward trend from 3Q09,” Lai said. His end-2009 forecast for the ringgit is 3.25 to 3.27 against the US dollar.
While most analysts expect more rate cuts in the first quarter of 2009 and a weaker ringgit as a result, Lai believed the movement of the overnight policy rate was only material to the local unit if the global foreign exchange market returned to stability.
“If the United States really slips into a very deep recession and the China economy undergoes a hard landing, the Malaysian economy will definitely not be spared the adverse effects,” Lai said.
“In order to support the ringgit, it is crucial that the central bank maintains the growth momentum of the economy and ensure that it would not slip into recession.”
The ringgit closed 0.11% lower against the US dollar at 3.6235 on Friday. Year to date, the currency has fallen 8.53%.
Thursday, November 27, 2008
Games Traders Play: Catch that Rally!
Posted By:Daryl Guppy
Volume is the fuel that drives the market. Charts yield clues when volume is out of character. High turnover on a lower close indicates selling pressure -- people want to get out and no one is eager to buy, so the price falls. High volume on a stronger close indicates buying pressure -- people want to get in, but nobody is willing to sell, so buyers must bid higher.
In this installment that looks into the price/volume dynamic, Charting Asia delves into volume activity reflecting a fast moving rally that, if traded correctly, can deliver good short-term profits for low risk before the rally retreats or moves sideways.
Catch That Rally!
Rally behavior is important as it's often the beginning of a change in the trend from down to up. Unfortunately many people think every rally is the beginning of a new uptrend.
A rally provides a five to ten day trading opportunity and must be managed with a tight stop loss. The way volume increases with price, separates a genuine rally from a skilful example of price manipulation in a 'pump and dump' scheme. It also tells the trader when there's a 'dead cat' bounce. These are the rules.
Recognition rules:
· Stock has a history of good trading volume with well defined rises and falls
(Refer the corresponding charts)
· Volume increases for several days
· Price moves slowly, and then accelerates. This is defined with a parabolic trend, or a trend line
· Volume increases as the price begins to move more quickly
Trading rules:
· Enter when price rebounds from the trend line
· Use resistance targets as exit points
· Watch momentum and volume decline. A rapid decline in volume with little change in price is a sure signal of a 'dead cat' bounce.
Volume is the fuel that drives the market. Charts yield clues when volume is out of character. High turnover on a lower close indicates selling pressure -- people want to get out and no one is eager to buy, so the price falls. High volume on a stronger close indicates buying pressure -- people want to get in, but nobody is willing to sell, so buyers must bid higher.
In this installment that looks into the price/volume dynamic, Charting Asia delves into volume activity reflecting a fast moving rally that, if traded correctly, can deliver good short-term profits for low risk before the rally retreats or moves sideways.
Catch That Rally!
Rally behavior is important as it's often the beginning of a change in the trend from down to up. Unfortunately many people think every rally is the beginning of a new uptrend.
A rally provides a five to ten day trading opportunity and must be managed with a tight stop loss. The way volume increases with price, separates a genuine rally from a skilful example of price manipulation in a 'pump and dump' scheme. It also tells the trader when there's a 'dead cat' bounce. These are the rules.
Recognition rules:
· Stock has a history of good trading volume with well defined rises and falls
(Refer the corresponding charts)
· Volume increases for several days
· Price moves slowly, and then accelerates. This is defined with a parabolic trend, or a trend line
· Volume increases as the price begins to move more quickly
Trading rules:
· Enter when price rebounds from the trend line
· Use resistance targets as exit points
· Watch momentum and volume decline. A rapid decline in volume with little change in price is a sure signal of a 'dead cat' bounce.
The Games Traders Play: Pump & Dump
Market volume is very significant in short-term trading. The relationship between price and volume provides a guide to the type of buying or selling activity that is developing.
We kick off by looking at the games traders play.
Traders and investors are constantly playing games in the market. Market volume is a record of such activities. Careful analysis of the relationship between price and volume tells us which game is in play. You keep score by calculating the difference between your entry price and your exit price. What games are out there?
Pump & Dump: This is where desperate individuals play bully with a small stock and use small volume trades to push up price. This price rise is irresistible to other traders and they buy in the hope the price rise will continue. They are tagged when the price manipulator pulls out of the market.
Hide and Seek: This is when an investor tries to build a large position in a stock without causing the price to rise.
Catch that Rally: This is when investors capture a short burst of activity in a fast moving rally that, if traded correctly, can deliver good short-term profits for low risk before the rally retreats or moves sideways.
Pass the Parcel: The game starts with volume based on rumor. The aim of this game is not to be left holding the stock when the rumor is either confirmed or dismissed in the market.
This column details the share manipulation game of Pump & Dump. Here, the manipulator buys a significant volume of shares. Others see the price movement and join the rally. The manipulator then sells to these new buyers and captures a quick profit. The price is 'pumped up' and then the shares are 'dumped' or sold to unsuspecting buyers.
Pump and Dump = Recognition Rules
· Stock has a history of very low trading volume (refer the corresponding charts)
· Volume suddenly increases dramatically and is often associated with just a few trades during the day.
· Price increases by 10% or more
· Very fast price rise is associated with sudden very high volume
· There is no news event that might explain the price rise
· Gap up activity is often followed the next day by a fall in price
Trading rules
· Buy when the price begins to increase on day one. Use intraday charts to identify opportunity
· Sell on day two or day three of the price move
Recognizing the correct price and volume relationship allows traders to make a better decision about the best trading or investment approach to use for the trade.
We kick off by looking at the games traders play.
Traders and investors are constantly playing games in the market. Market volume is a record of such activities. Careful analysis of the relationship between price and volume tells us which game is in play. You keep score by calculating the difference between your entry price and your exit price. What games are out there?
Pump & Dump: This is where desperate individuals play bully with a small stock and use small volume trades to push up price. This price rise is irresistible to other traders and they buy in the hope the price rise will continue. They are tagged when the price manipulator pulls out of the market.
Hide and Seek: This is when an investor tries to build a large position in a stock without causing the price to rise.
Catch that Rally: This is when investors capture a short burst of activity in a fast moving rally that, if traded correctly, can deliver good short-term profits for low risk before the rally retreats or moves sideways.
Pass the Parcel: The game starts with volume based on rumor. The aim of this game is not to be left holding the stock when the rumor is either confirmed or dismissed in the market.
This column details the share manipulation game of Pump & Dump. Here, the manipulator buys a significant volume of shares. Others see the price movement and join the rally. The manipulator then sells to these new buyers and captures a quick profit. The price is 'pumped up' and then the shares are 'dumped' or sold to unsuspecting buyers.
Pump and Dump = Recognition Rules
· Stock has a history of very low trading volume (refer the corresponding charts)
· Volume suddenly increases dramatically and is often associated with just a few trades during the day.
· Price increases by 10% or more
· Very fast price rise is associated with sudden very high volume
· There is no news event that might explain the price rise
· Gap up activity is often followed the next day by a fall in price
Trading rules
· Buy when the price begins to increase on day one. Use intraday charts to identify opportunity
· Sell on day two or day three of the price move
Recognizing the correct price and volume relationship allows traders to make a better decision about the best trading or investment approach to use for the trade.
Identifying Capitulation: How to Tell We've Hit Bottom
Posted By:Daryl Guppy- CNBC.com
Are we there yet? This is the key question and it relates to finding the bottom of the market.
In many ways it's a pointless question. Even if we could identify the turning point in the market with a high level of certainty, there are very few people with the courage to enter at these low points.
The more important thing to look for are the features that will help to identify, first, the end of the market fall and second, the development of a market recovery. These two events may be separated by a few months, or by many months.
There are two important features that identify climax selling. The first is the rapid acceleration in the speed of the market fall. Like a Stuka dive-bomber, the market first rolls over slowly and then plunges in a vertical dive. This is fear at work.
The second feature is a massive increase in volume. This is panic. Ordinary people are desperate to get out of the market. Generally the funds and institutions got out of the long-side of the market many months ago. The selling in January and February was dominated by institutions and funds. The current panic selling is thousands of small orders from retail investors desperate to get out of the market.
During the bear market collapse, volumes decline. Fewer people want to buy stock so volatility increases because small trades have a disproportionate impact in a shallow market.
This selling climax shakes out all the weak hands in the market. It kills the margin speculators. It wipes out those who have finally lost patience. It removes the speculative money in the market because people think the risk is too great. This is also called capitulation. Everybody gives up – and it influences the thinking of a generation. My parents, who lived through the depression, could never entirely shake the idea that the market was a dangerous place.
The activity in the Dow Jones Industrial Average and other global markets shows an acceleration of downwards momentum. The massive increase in volume has not yet developed and this suggests the market bottom is not yet established. There is a high probability that markets will see a selling climax in the next 3 to 5 days. But here is the important difference. The recovery rally after climax selling is temporary. It is part of a longer-term consolidation pattern that may last months, or even a year, and make more new lows before a new sustainable uptrend can develop. The potential shape of the recovery is shown in the chart. The bull market rebound rally follows a temporary selloff. A bear market rebound rally follows climax selling. It is a relief really, but it is not part of a sustainable trend change.
After a bear market, volumes remain low. When you lose trillions of dollars it takes a long time for spare change to start rattling around the economy again. Spare change drives the bull market because money is available for speculation.
In the immediate bear market recovery period the market is dominated by professionals. Finance industry professionals are already being laid off. The least effective are the first to be let go. Only the best will survive the employment washout in the industry and these will be the ones defining the behavior of the consolidation and recovery market.
Are we there yet? This is the key question and it relates to finding the bottom of the market.
In many ways it's a pointless question. Even if we could identify the turning point in the market with a high level of certainty, there are very few people with the courage to enter at these low points.
The more important thing to look for are the features that will help to identify, first, the end of the market fall and second, the development of a market recovery. These two events may be separated by a few months, or by many months.
There are two important features that identify climax selling. The first is the rapid acceleration in the speed of the market fall. Like a Stuka dive-bomber, the market first rolls over slowly and then plunges in a vertical dive. This is fear at work.
The second feature is a massive increase in volume. This is panic. Ordinary people are desperate to get out of the market. Generally the funds and institutions got out of the long-side of the market many months ago. The selling in January and February was dominated by institutions and funds. The current panic selling is thousands of small orders from retail investors desperate to get out of the market.
During the bear market collapse, volumes decline. Fewer people want to buy stock so volatility increases because small trades have a disproportionate impact in a shallow market.
This selling climax shakes out all the weak hands in the market. It kills the margin speculators. It wipes out those who have finally lost patience. It removes the speculative money in the market because people think the risk is too great. This is also called capitulation. Everybody gives up – and it influences the thinking of a generation. My parents, who lived through the depression, could never entirely shake the idea that the market was a dangerous place.
The activity in the Dow Jones Industrial Average and other global markets shows an acceleration of downwards momentum. The massive increase in volume has not yet developed and this suggests the market bottom is not yet established. There is a high probability that markets will see a selling climax in the next 3 to 5 days. But here is the important difference. The recovery rally after climax selling is temporary. It is part of a longer-term consolidation pattern that may last months, or even a year, and make more new lows before a new sustainable uptrend can develop. The potential shape of the recovery is shown in the chart. The bull market rebound rally follows a temporary selloff. A bear market rebound rally follows climax selling. It is a relief really, but it is not part of a sustainable trend change.
After a bear market, volumes remain low. When you lose trillions of dollars it takes a long time for spare change to start rattling around the economy again. Spare change drives the bull market because money is available for speculation.
In the immediate bear market recovery period the market is dominated by professionals. Finance industry professionals are already being laid off. The least effective are the first to be let go. Only the best will survive the employment washout in the industry and these will be the ones defining the behavior of the consolidation and recovery market.
Ringgit Weakening..?
Morgan Stanley forecasts the ringgit will decline 3.5 per cent to 3.75 per dollar by December 31 and to 4.00 by end-June 2009
INVESTORS should buy so-called “butterfly” options on the Malaysian ringgit in a bet that volatility will rise by year-end as the central bank tolerates a weaker currency, according to Morgan Stanley.The US bank forecasts the ringgit will drop 3.5 per cent to 3.75 per dollar by December 31 and to 4.00 by the end of June as growth in Southeast Asia’s third-largest economy cools and Bank Negara Malaysia cuts interest rates.
A central bank report tomorrow may show gross domestic product expanded in the third quarter at the slowest annual pace in more than three years, a Bloomberg News survey shows.
INVESTORS should buy so-called “butterfly” options on the Malaysian ringgit in a bet that volatility will rise by year-end as the central bank tolerates a weaker currency, according to Morgan Stanley.The US bank forecasts the ringgit will drop 3.5 per cent to 3.75 per dollar by December 31 and to 4.00 by the end of June as growth in Southeast Asia’s third-largest economy cools and Bank Negara Malaysia cuts interest rates.
A central bank report tomorrow may show gross domestic product expanded in the third quarter at the slowest annual pace in more than three years, a Bloomberg News survey shows.
Public Bank Profit RM1.93bil
Public Bank Bhd (1295), Malaysia's biggest lender by market value, is on track to strong growth this year after earnings expanded 25 per cent in the first nine months, a top official said yesterday.
Managing director Tan Sri Tay Ah Lek also said that the 25 basis points cut in the Overnight Policy Rate (OPR) this week would only have a marginal impact on its net interest margins."Our profit is on track this year. Earnings in the first nine months already grew 25 per cent. It will be around there for the full year. It will be in line with analysts' expectations," he said after an award ceremony in Kuala Lumpur.Its net profit reached RM1.93 billion in the three quarters ended September 30 2008, buoyed by healthy growth in interest income.This brings the earnings per share to 57.4 sen in the nine-month period, from 46 sen last year- NST.
KLCI 870 (+14, +1.6%)
My Gainers = Commerz 5.85/6.05 (3%), Esso 2.00/2.07 (4%), IOI 2.98/3.14 (5%), Mbb 5.05/5.2 (3%) , PPB 8.45/8.40 (1%), Tanjong 12.4/12.0 (3%)
Top Losers = Resort 2.65/2.44(dn0.12, 8%).
Lost Opportunity over the 10 days: KFC 6.60 to 7.30, PetDag 6.60 to 7.20
Managing director Tan Sri Tay Ah Lek also said that the 25 basis points cut in the Overnight Policy Rate (OPR) this week would only have a marginal impact on its net interest margins."Our profit is on track this year. Earnings in the first nine months already grew 25 per cent. It will be around there for the full year. It will be in line with analysts' expectations," he said after an award ceremony in Kuala Lumpur.Its net profit reached RM1.93 billion in the three quarters ended September 30 2008, buoyed by healthy growth in interest income.This brings the earnings per share to 57.4 sen in the nine-month period, from 46 sen last year- NST.
KLCI 870 (+14, +1.6%)
My Gainers = Commerz 5.85/6.05 (3%), Esso 2.00/2.07 (4%), IOI 2.98/3.14 (5%), Mbb 5.05/5.2 (3%) , PPB 8.45/8.40 (1%), Tanjong 12.4/12.0 (3%)
Top Losers = Resort 2.65/2.44(dn0.12, 8%).
Lost Opportunity over the 10 days: KFC 6.60 to 7.30, PetDag 6.60 to 7.20
Saturday, November 22, 2008
Double Cheap Stocks
1 AUD = 2.22 MYR, 1000KrW = 2.39 MYR. Monitoring over next week..
Get ready to transact MYR to AUD and KrW for purchase of stocks in Aussie and Korea. It's going to be a double gain. Both stocks and currencies has fallen.
Stocks fallen by 50%. And it's cheaper to purchase now considering the currency fluctuation of 30%.
US market stocks are cheap too. Just beware of currency risk when repatriating your money back to Malaysia. Not a problem if you intend to park your monetary gain in USA for other venture.
A Stock's Price is Rarely the Same as a Company's Value:
The first thing I've learned is that a stock's price is rarely the same as the company's value. The reason for that is the valuation process is flawed. Stock prices are heavily affected by market dynamics and by investors' emotions. These emotions swing widely from pessimism to optimism. Also, many investors buy stocks with the intention of holding them for 1 to 5 years based upon information that really only applies to a short-term time horizon. While the information they are using to invest may be valuable, it is often the wrong information for their investment timeframe. If people invest in a company based on current information, they have to be prepared to act on any changes in that information in a much shorter time frame than most investors are prepared to do. Richard Driehaus
Thursday, November 20, 2008
Currency Play KRW: It's About Time
South Korean won plunges to new multi-year low against dollar and yen on recession fears
(RTTNews) - During early deals on Friday, the South Korean won declined to new multi-year lows against the US dollar and the Japanese yen on escalating concerns that Asia's fourth-largest economy will slip into a recession for the first time since 1998.
As the economic and financial troubles spread, the country's central bank is due to hold an emergency policy meeting next week to decide whether to join a proposed 10 trillion won or $6.57 billion fund to buy bonds issued by local companies.On November 3rd, the South Korean government unveiled a stimulus package worth 14 trillion won to boost the slowing economy. The package includes 11 trillion won fiscal spending next year and 3 trillion won tax benefits. The package also calls for 3.4 trillion won to assist small and medium sized companies and farmers. The ministry said an additional 1.3 trillion won would be spent for low-income earners.
The central bank has also slashed its base rate by 75 basis points to 4.25% from 5% in a series of cuts, including the biggest in its history, from early October, as the global downturn bites into South Korean economic growth.The South Korean economy, Asia's fourth-largest, is slumping hit by a global economic downturn as exports, which account for more than 60 percent of its economic expansion, is faltering on economic recession worldwide.
The South Korean won slumped to 1519.00 against the US dollar during early Asian deals on Friday. This set the lowest mark for the won since March 1998. On the downside, 1644 is seen as the next target level for the won. The dollar-won pair that closed Thursday's North American session at 1496.40 is currently trading at 1509.20.The South Korean won that closed Thursday's North American session at 15.9325 against the Japanese yen declined to 16.0895 at 9:35 pm ET. This set a new multi-year low for the South Korean currency.
1000KRW = 2.45MYR now compared to 3.6MYR two years ago.
(RTTNews) - During early deals on Friday, the South Korean won declined to new multi-year lows against the US dollar and the Japanese yen on escalating concerns that Asia's fourth-largest economy will slip into a recession for the first time since 1998.
As the economic and financial troubles spread, the country's central bank is due to hold an emergency policy meeting next week to decide whether to join a proposed 10 trillion won or $6.57 billion fund to buy bonds issued by local companies.On November 3rd, the South Korean government unveiled a stimulus package worth 14 trillion won to boost the slowing economy. The package includes 11 trillion won fiscal spending next year and 3 trillion won tax benefits. The package also calls for 3.4 trillion won to assist small and medium sized companies and farmers. The ministry said an additional 1.3 trillion won would be spent for low-income earners.
The central bank has also slashed its base rate by 75 basis points to 4.25% from 5% in a series of cuts, including the biggest in its history, from early October, as the global downturn bites into South Korean economic growth.The South Korean economy, Asia's fourth-largest, is slumping hit by a global economic downturn as exports, which account for more than 60 percent of its economic expansion, is faltering on economic recession worldwide.
The South Korean won slumped to 1519.00 against the US dollar during early Asian deals on Friday. This set the lowest mark for the won since March 1998. On the downside, 1644 is seen as the next target level for the won. The dollar-won pair that closed Thursday's North American session at 1496.40 is currently trading at 1509.20.The South Korean won that closed Thursday's North American session at 15.9325 against the Japanese yen declined to 16.0895 at 9:35 pm ET. This set a new multi-year low for the South Korean currency.
1000KRW = 2.45MYR now compared to 3.6MYR two years ago.
S&P 500 @ 752
MALAYSIAN shares are expected to open lower today after the Standard & Poor’s 500 index plunged to its lowest level in 11 years on worsening fears about the US economic slowdown. The Standard & Poor’s 500 Index lost 54.14 points, or 6.71 per cent, to 752.44 after data showed the number of US workers on jobless rolls surged to the highest in a quarter century. “Basically, we are looking at a gloomy, gloomy day for Malaysian stocks. There will be further downside pressure because the S&P 500 crashed to its lowest level since 1997,” said Stephen Soo, technical analyst at TA Securities. “The US government’s possible bailout plan for the auto sector will definitely affect market in the region and we will not be able to escape that regional selldown,” he said.
The Dow Jones industrial average plunged 444.99 points, or 5.56 per cent, to 7,552.29. The Nasdaq Composite Index slid 70.30 points, or 5.07 per cent, to 1,316.12. - Reuters
The Dow Jones industrial average plunged 444.99 points, or 5.56 per cent, to 7,552.29. The Nasdaq Composite Index slid 70.30 points, or 5.07 per cent, to 1,316.12. - Reuters
Wednesday, November 19, 2008
AUD & KRW Currency Play
From recent peak, AUD currency has drop by 30% while KRW has drop by 28%. GBP also has fallen 28%. Time to buy...?
I think commodity currencies AUD, BRR will descend further and so will export currency KRW. Hold your horses just a bit longer..
Approximate Rate: 1 AUD = 2.3 MYR, 1000KRW = 2.5MYR
http://www.forexcult.com
Risk Control & Size Positioning
5 years low since 2003. DJIA down 457 (5%) to 7997 with S&P500 down 52(6%) to 806 points: 3390 losers and 303 gainers were registered.
Auto industryin trouble, consumer spending down, energy down 9%.
Oil at 22 months low.
For reader interested in position sizing:
http://turtleinvestor888.blogspot.com/2008/08/art-of-risk-control-position-sizing.html
Suppose you have RM100,ooo capital and you wants to buy/sell stock shares but is willing to lose only up to RM10,000. Then what is the size of your position in the stock market given a risk control loss?
1. Set up a cut loss line. If your risk loss is 20% tolerance, that means you can take a position up to RM50,000. The Rm50,000 is the size of your stock investment/trading. In any event of a sharp value decline of your stock holding by 20%, you lose only RM10,000.
But if your tolerance is 10%, then you can actually position the size of your whole capital of RM100,000 to buy shares. In any event of loss, it is restricted to RM10,000.
So say you bought IOI Corp share at RM4 x 25000 shares and unfortunately the market declines. Share now goes down in price. Your cut loss is 10% and you should sell when price drops to RM3.60 thus preserving your capital: 25ooo shares x RM3.60 = RM90,000.
2. Assuming you quit the stock market and place your reduced capital of RM90,000 with a bank earning deposit interest of 3.75%, it will take 3 years for your placement to revert back to RM100,000.
Auto industryin trouble, consumer spending down, energy down 9%.
Oil at 22 months low.
For reader interested in position sizing:
http://turtleinvestor888.blogspot.com/2008/08/art-of-risk-control-position-sizing.html
Suppose you have RM100,ooo capital and you wants to buy/sell stock shares but is willing to lose only up to RM10,000. Then what is the size of your position in the stock market given a risk control loss?
1. Set up a cut loss line. If your risk loss is 20% tolerance, that means you can take a position up to RM50,000. The Rm50,000 is the size of your stock investment/trading. In any event of a sharp value decline of your stock holding by 20%, you lose only RM10,000.
But if your tolerance is 10%, then you can actually position the size of your whole capital of RM100,000 to buy shares. In any event of loss, it is restricted to RM10,000.
So say you bought IOI Corp share at RM4 x 25000 shares and unfortunately the market declines. Share now goes down in price. Your cut loss is 10% and you should sell when price drops to RM3.60 thus preserving your capital: 25ooo shares x RM3.60 = RM90,000.
2. Assuming you quit the stock market and place your reduced capital of RM90,000 with a bank earning deposit interest of 3.75%, it will take 3 years for your placement to revert back to RM100,000.
Sunday, November 16, 2008
S&P500 chart
Someone say S&P 500 is a better indicator of trend as it is more broader reflection of the American economy.
On Friday, it closes down 38 points (4.2%) at 873. Materials and financials were weak.
Tuesday, November 11, 2008
Commodity Currencies Down
Fears about a global slowdown weigh on the markets. Commodity Index down 1% to 257, Gold down 2% to USD728, Crude Oil down 5% to USD59.
DJIA down 3% to 8600 at 12.20pm
Commodity currencies all down with AUD and NZD losing 3%
USD Index strength at 86.8
Monday, November 10, 2008
Wednesday, October 29, 2008
Monday, October 20, 2008
Thursday, September 4, 2008
Thursday, August 14, 2008
Asian Stocks Dropped. Commodities Slighty Up
Aug. 14 (Bloomberg) -- Asian stocks fell, led by financial companies, after developer Urban Corp. filed for bankruptcy and Merrill Lynch & Co. said the credit crisis is far from over. Commodity producers gained after oil and metal prices rose.
You've got Europe slowing, Japan slowing, and a question mark over China. Something has to give.The MSCI Asia Pacific Index lost 0.4 percent to 125.75 at 5:35 p.m. in Tokyo, a third day of declines and the lowest close since September 2006. The gauge has slumped 20 percent this year as inflation accelerated, growth slowed and global financial companies posted writedowns and credit losses of more than $500 billion.
Metals & Oil:
A measure of six metals traded on the London Metal Exchange rose 3.2 percent yesterday, its largest gain since March 27. Crude oil for September delivery advanced 2.7 percent to $116 a barrel, the largest gain since July 30, and futures climbed as much as 0.8 percent to $116.94 today.
The rally in commodity prices coincided with a rebound in the Baltic Dry Index, http://www.bloomberg.com/apps/quote?ticker=BDIY%3AIND which tracks transport costs of raw commodities on international trade routes. The gauge gained 1.5 percent yesterday, ending a 23-day, 25 percent slump.
Measures tracking materials companies and shipping lines on MSCI's Asian index have dropped 12 percent and 8.4 percent respectively in the past month, the worst performances among the broader measure's 10 industry groups.
Longer-Term Outlook:
``Global growth may have slowed, but it hasn't stopped, which is why people are looking to pick up oversold commodities shares and shippers on their longer-term outlook,'' said Hideyuki Ookoshi, who helps oversee $365 million at Chiba- Gin Asset Management Co.
You've got Europe slowing, Japan slowing, and a question mark over China. Something has to give.The MSCI Asia Pacific Index lost 0.4 percent to 125.75 at 5:35 p.m. in Tokyo, a third day of declines and the lowest close since September 2006. The gauge has slumped 20 percent this year as inflation accelerated, growth slowed and global financial companies posted writedowns and credit losses of more than $500 billion.
Metals & Oil:
A measure of six metals traded on the London Metal Exchange rose 3.2 percent yesterday, its largest gain since March 27. Crude oil for September delivery advanced 2.7 percent to $116 a barrel, the largest gain since July 30, and futures climbed as much as 0.8 percent to $116.94 today.
The rally in commodity prices coincided with a rebound in the Baltic Dry Index, http://www.bloomberg.com/apps/quote?ticker=BDIY%3AIND which tracks transport costs of raw commodities on international trade routes. The gauge gained 1.5 percent yesterday, ending a 23-day, 25 percent slump.
Measures tracking materials companies and shipping lines on MSCI's Asian index have dropped 12 percent and 8.4 percent respectively in the past month, the worst performances among the broader measure's 10 industry groups.
Longer-Term Outlook:
``Global growth may have slowed, but it hasn't stopped, which is why people are looking to pick up oversold commodities shares and shippers on their longer-term outlook,'' said Hideyuki Ookoshi, who helps oversee $365 million at Chiba- Gin Asset Management Co.
Sunday, August 10, 2008
US Market Info
Basic Material Sector: http://finance.google.com/finance?catid=57629812
Gold & Silver: http://finance.google.com/finance?catid=64980108
Steel & Iron: http://finance.google.com/finance?catid=59337585
Energy Sector: http://finance.google.com/finance?catid=60918252
Gold & Silver: http://finance.google.com/finance?catid=64980108
Steel & Iron: http://finance.google.com/finance?catid=59337585
Energy Sector: http://finance.google.com/finance?catid=60918252
Sector Rotation Says Bearish
SECTOR ROTATION MODEL...
One of our readers asked where we are in the Sector Rotation Model. That model shows the normal sector rotation that takes place at various stages in the business cycle. The chart shows that basic materials and energy are market leaders at a market peak. As the economy starts to slow, money starts to rotate out of those two inflation-sensitive groups. Basic materials peak first and energy last. This week's downturn in basic material stocks suggests that the topping process is moving even further along. Energy may be the next to roll over. As the economy slows, money flows into consumer staples, healthcare services, and utilities. That's where we appear to be right now. One way we can tell that a bottom is near is when money starts to flow into financial and consumer discretionary stocks. So far, there's no sign of that happening. That leaves us in the midst of a bear market with money flowing toward staples, healthcare, and utilities.
John Murphy
Friday, August 8, 2008
Steel Counter Potential
With the listing of Perwaja on Weds 20th Aug., there is a potential steel related counters may stage a rally. So be prepared..
Ann Joo RM3.68
4 Q nett profit RM267 million. Shares 522 million. Earnings per share = RM267/522= 51 sen.
Therefore the PER is 368/51= 7.
Nett asset = 159. Price/book= 368/159= 2.3
Earnings/nett asset= 51/159= 34%
Perwaja IPO RM2.90
4 Q profit RM215M. Shares 560M. EPS = 38.5 sen
If IPO is RM2.90, then PER is 290/38.5 = 7.5 which is similar to Ann Joo
If Perwaja moves beyond Rm2.90, expect other steel counter to rally,,?
Southern Steel RM2.90
4Q profit RM180M. Shares 419M. EPS = 43 sen
PER is 6.7 Price/book is 1.66 Earning/asset is 24%
Huaan RM0.59
4Q profit RM125M. Shares 1100 M. EPS = 11 sen
PER is 5.2 Price/book is 0.9 Earning/asset is 19%
Ann Joo RM3.68
4 Q nett profit RM267 million. Shares 522 million. Earnings per share = RM267/522= 51 sen.
Therefore the PER is 368/51= 7.
Nett asset = 159. Price/book= 368/159= 2.3
Earnings/nett asset= 51/159= 34%
Perwaja IPO RM2.90
4 Q profit RM215M. Shares 560M. EPS = 38.5 sen
If IPO is RM2.90, then PER is 290/38.5 = 7.5 which is similar to Ann Joo
If Perwaja moves beyond Rm2.90, expect other steel counter to rally,,?
Southern Steel RM2.90
4Q profit RM180M. Shares 419M. EPS = 43 sen
PER is 6.7 Price/book is 1.66 Earning/asset is 24%
Huaan RM0.59
4Q profit RM125M. Shares 1100 M. EPS = 11 sen
PER is 5.2 Price/book is 0.9 Earning/asset is 19%
Wednesday, August 6, 2008
Investing Basic
Investing Basic.
Look up in the following site:
http://beginnersinvest.about.com/cs/investinglessons/l/blintroduction.htm
Look up in the following site:
http://beginnersinvest.about.com/cs/investinglessons/l/blintroduction.htm
http://mystockthoughts.blogspot.com/2007/08/financial-statement-as-analysis.html
Monday, August 4, 2008
Petrol Prices At The Pump
Self- explanatory.Actual Price = RM2.94 per litre
Malaysian Gov't subsidise 30 sen per litre
You pay RM2.64 per litre at petrol station pump
Sunday, July 20, 2008
Wednesday, May 28, 2008
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