The Great 2010 Expectation

The title may sound a bit positive while the indicators may not. First of all, the bull run since March 2009 has been the "craziest" since the Great Depression and the current stock prices are considered overbought. Indices around the world are just around 30%-40% to all-time-high. Since I don't have the PE information but I can tell it is quite high as the earnings haven't been much improved.

Today is the last day of 2009. What should we expect for 2010?

Slow recovery? Yes like everyone is saying. Looking at the Baltic Dry Index can give us a good hint:

Compared to the bubble sparked off by the Beijing Olympic sacred fire, the trades are not catching up well in 2009. Trades across countries are slowing and do not show signs of quick recovery as economists predicted. To me, there are two bubbles got burst in 2008 after the Olympics Game: the US housing bubble and Olympic Hype bubble. The burst of these two bubbles sent a huge tsunami across the globe. To see a light to the recovery, companies have to adjust their inventory and earnings forcasts to pre-Beijing-Olympic-bubble level. The expectations were too high. Adjustments are needed to change the mindset of hungry analysts.

Another concern is the USD. The following shows the sudden surge of USD after falling to almost a 2007 level or pre-Beijing-Olympic-bubble level. If the USD carry trade bubble is non-existent, we have nothing to worry about. If there is one, we should be able to see it for the next few months as housing and gold prices will fall followed by commodity prices.

I bet many analysts are following this trend. It could send the commodity prices to a very low level that could bring the equity down substantially.

By observing  both DXY and Baltic Dry Index charts, bulls in stock markets are not going anywhere. The next to watch is the US employment condition. Either up or down, the stock market will be volatile due to the sudden change in the USD strength as well as the uninspiring trade condition. Trade with caution is the key. The best bull run is over and the bear may not come out soon but there are signs that it may finish its hybernation anytime. But I believe US Fed is able to create something to stop. So far Bernanke has been successful in the timing of offsetting all the bad news. Hope he doesn't create a bubble for blocking all these bad news from floating up to the surface of the titanic crash site.

This concludes my blog for 2009. May 2010 be an exciting one and happy 2010!

Why XingQuan and BSDREIT?

Here's my explanaton:

1) XingQuan - Exposure to rising Chinese market. A big discount to IPO price. Chinese New Year is approaching. Compared to MSPORT, the revenue is lower but the EPS is much higher (6 cents vs 0.12 cents). Although the profit and revenue are similar between MSPORT and XingQuan, the EPS is 50 times difference! MSPORT is way too diluted. The IPO issues too many shares. It's a very big problem for MSPORT.

My target price is around RM1.40. If there is no accidental event, I hope I can sell at around this price. I'm also thinking of increasing my exposure to this stock at current price of RM1.20, but something held me behind. It's the lack of track record for this share. Usually people don't dump all their money into a new IPO.

The coming announcement of dividend will send this stock upward. But by how much, nobody knows. It also depends on the dividend amount. If it declares a 2.5 cents dividend, it will surge also around 2-3 cents after the announcement. We'll see.

2) BSDREIT - This is a very defensive stock to hold. The purpose is just the dividend, dividend and dividend. Nothing else. Since the payout announcement is coming soon (most likely in January). I'll see if it's worth to keep. Compared to STAREIT, the earnings report looks a lot prettier. The EPS is 9.66, Unlike STAREIT, the EPS until September 2009 is merely 1.74 cents. This kind of earnings (STAREIT) can send many people to heart attack ward.

Here are my reasons for owing XingQuan and BSDREIT. As for Citigroup, it's just a long term investment. After TARP repayment (although it is on hold at this moment), it's like a "re-IPO" at US$3.15. Just treat it as a new bank and you'll like it for the long term. John Paulson and Jim Cramer like it. I plan to keep it for 5-8 years. When the housing loan sector starts to recover, Citi should be quite benefited from it. Although the CEO doesn't make much sense most of the time, he won't stay in the position forever. Just treat as a IPO, you'll like it.

Plus, compared to BAC, C has more international exposure where housing bubble is nearly non-existent. I'm not sure about Malaysia, although it looks like there is one, it's still better than Hong Kong. By comparison, Penang island look quite similar to Singapore and Hong Kong due to its limited land. Anyway, there goes all my explanations.

Coming soon: Shares that I like to own beside these: BJTOTO-CF, MPHB, FAJAR, Pelikan, INSAS, and SUNCITY. I'll state my reasons and post if I bought any of those. I've used 5k of my fund, still RM25k to go.

My current holding

I need to declare my current holding of stocks and update the progress as time goes by. It's also a self-disciplinary step for me hold my stocks as long as I can. I have a history of bad holding power and led me to my losses in the past few years.

My KLSE holding is:
XinQuan - 2000 shares (@RM1.20)
BSDREIT - 2000 shares (@RM1.30)

My US E-trade account holding is:
C (Citigroup) - 250 shares (@USD3.47)

My fund is limited (RM30k) and I will post screen shots if I make any buy and sell to prove my actual trade. Wish me luck and also don't wish me luck. In stock market, the more you depend on luck, the faster you lose money as you tend to gamble forget about the investment part, eg. the earnings, etc.

I like to set target earnings for 2010 but it is the cause of failure from past experience. One tends to lose focus when a target is set. One tends to limit themselves to make certain amount of money in a confined time frame which results in the wrong sell/buy timing. Timing is very crucial in the short term and may not affect much in the long term. Inflation is picking up fast in Malaysia and relying on long term investment may not be able to fight the inflation in the short term. I will invest both in long and short term. And don't wish me luck as I am not gambling.

With this clarification, my journey emarks...

My First Posting, My First Blog.

Today is December 30th 2009, two days before the new year. I started this blog to record my investment journey in stock market both domestic (Malaysia KLSE) and the US.

I have never written any blogs before but I will try to learn as much as I can over the next few months. I like to write articles and I think this is the main driving force for me to jump into this blogging industry. It is already an industry as many people livestock depend on it.

I think the world is now facing a new revolution. The internet now replaces many of our lifestyles and joining the boat is the only way to the brighter future. I don't think Internet will die unless one day the world is out of energy to power up computers.

2009 is a very special year for most of us as we witness one of the great event in the equity market and global economy. I will start blogging my journey from 2009 to ... hopefully as long as I can.

The turmoil in the US financial market is marking a spot in the history and most people want to forget it as soon as they can. I want to remember it.

Since it is just less than 48 hours from the new year (Malaysia time), I will like to spend this opportunity to say "Happy 2010!" and hopefully this is a truly happy statement as we may be embarking on a rocky journey onwards. This ends my very first posting, my very first blog. Good day!