Married to United States

FYI: Tomorrow KLSE is closed due to public holiday in KL.

"Coupling" is the technical term used to describe the closed relationship between two stock markets.

There are people who are curious about why the fall in the United States' stock markets can have adverse effect on other stock markets that open the next day. Why?

We need to understand the economy to explain this phenomenon. If the economy of particular country has closed relationship with the other one, they tend to share the same fate in the stock market. It also depends on how matured the investors of a particular country. Everyone has the choice to buy or sell at a particular time. No one forces you to sell or buy any stocks. There are people who like to refer to other stock markets to make their decisions. These people are usually of more of a trader type than investor type. They don't hold position for a long time. They are even day traders. Those who are familiar with Forex should be very clear about this as Forex trading are traded for a very short term only.

Eventually, all fund managers know that during a bear market, those who sell last will get the worst selling price. That is the reason why stock market falls very quickly whenever there is economy related bad news in an influential country as investors choose to cash out as a safety measure. If the news turns out to be not so threatening, investors can buy back anytime.

In summary, why does a stock market fall? Just to play it safe.


How to play safe in next week's stock market? Monitor in the sideline.

The Ultimate Fear Indicator?

Usually when people are talking about safe asset, people refer to cash.

For most investors, cash is the last resort to safety.

DXY is an index of USD against 12 major currencies in the world.

It should be the most accurate indicator of fear, at least the past two years. When people are buying USD (the safest currency in the world), there should be some incidents going on to make investors nervous enough to convert investments to cash especially USD.

Here is the ultimate fear indicator:

First I did some benchmarks to past events to check the accuracy. This US suprime loan bubble was the best example. They all started when the (A) US SEC started make the credit rating transparent as they suspected that invetment banks were hiding something. (B) The transparent new rating did catch a big thief, Lehman Brothers. But USD starts to fall after that as foreign investors were leaving US. Then the matter was not all addressed by sending Lehman Brothers to take all the bullets. The real fear set in as investors know that it was just the beginning of the problem and starts converting all investments to safe cash (USD). Eventually USD was overbought and US Fed was announcing that they were printing a lots of money. USD started to plummet as printing money was just hurting the value of USD. Unfortunately, even selling USD won't help diminish the fear when (C) Citigroup, BAC and AIG were hinting that they might have some big issues. Even with the sharp dipped USD, investors were still cashing out which contributed to the new height of USD. It was the king of the fear type of situation. (D) In March 2009, Citigroup, BAC and AIG all received financial aids from the US government when respective company's shares were being converted to USD from the government. USD was starting to fall slowly ever since as people felt safe to invest again by using their USD to buy assets, stocks, etc.

In Jan 2010, US unemployment rate started to recover from the alarming uptrend. USD was in demand again as people needed to buy USD to purchase US assets. USD received warm welcome but demand was suddenly diminished as the US unemployment stays at 10% instead of going down.

A week ago, US President declared war on US banking system which sent fear throughout the world as this could indicate a major shift in the banking system. People start cashing out again until today. The spike indicates fear again. Cash is the only safe haven.

Enough for the history of the US subprime fairy tale, what's next?

By looking at the past trend and history, fear is rising at a alarming rate. Investors may keep converting investments into USD until the US President is clear of what the change to the US banking system is all about and the US unemployment rate starts to fall again. But falling unemployment rate can send the USD up again. That's the time I will use the word "decoupling" when USD no longer indicates fear. USD will go back to the supply-and-demand good old day where USD is just one of the many currencies.

CNY Rally or CNY Sale?

Everyone should be curious about this coming tiger. Is it going to eat you or it is going to show you its boldness?

The stock markets dislike uncertanties and potential bubble. Let's see how my past analaysis is doing today:

(Posted 2 days ago)

1) US President's intention to control Wall Street and remove life support for banks
2) Undecided decision for US Fed Chairman Ben Bernake to 2nd Term   Bernanke won 2nd term
3) China's Government to Limit Loan Facility

Anyway, new fears are being introduced into the system:
1) Greece and Spain potential backrupcy
2) China and Dubai asset bubble problem
3) Roubini says asset bubble is confirmed in China (Wednesday)
4) Geroge Soros says US will be in a 2nd recession (Wednesday)

I would like to also add another fear item#5 which everyone doesn't like to see: Asset bubble in Malaysia. We should be able to see the bubble starts to surface in April when construction companies in Malaysia start to announce earnings report.


My prediction:
Make medium term gain until end of February and get away from stock market or hold REIT shares with good earnings. Come back after the asset bubble in Malaysia is burst probably in April or May. My stock purchases will be sold whenever there is a chance. George Soros may be behind all these as he wants to buy cheap shares soon.

This tiger is great too.

Current Holding and Decision Time

 Yesterday was a panic selling day that everyone is still talking about.

I made decision to increase my holding of stock instead of unloading stocks:

Added 5000 share of MELEWAR at 0.645
Added 2000 share of XINQUAN at 1.12
The total position so far is:

15000 shares of MELEWAR averaged at RM0.682  (ignoring transaction fee)
7000 share of XINQUAN averaged at RM1.177 (ignoring transaction fee)

40% Cash and 60% Stocks.


The decision now is to reduce the positions or to hold. Increasing stock position is not recommended at this moment.

If the stock market is unfavorable, reducing position is a better option. We will see the direction of the wind in the next few days.

I also planned to buy some ETI TECH in the coming days. It is good for long term.



Global economic view:
The US President's Obama's State of the Union presentation is quite successful as he is trying to please everyone which helps boost the confidence of all individuals in the states.

US Fed Chairman Bernanke's reappointment today can be another boost to the possible rally in the next few days. If Bernanke has failed to be "rethroned" today, tomorrow can be a very ugly day but for just a short period of time as changing the captain in a battle is always not recommended. The battle over financial crisis is considered a big deal. It is unwise to change the leader half way of the battle.

China's asset bubble is believed to be controlled well under careful Chinese government.

US coming unemployment problem may post another threat to the US consumer confidence. George Soros has spoken that US is going to have another recession very soon. He also predicted the last recession. Dr. Doom is also giving another warning at CNBC interview on 27th of January 2010:

Roubini: Asset Bubble Is Beginning Now

Link: http://www.cnbc.com/id/35078010

The Stock Market Doesn't Like Uncertainties

3 Major Road Blocks to higher closing in global stock markets:

1) US President's intention to control Wall Street and remove life support for banks
2) Undecided decision for US Fed Chairman Ben Bernake to 2nd Term
3) China's Government to Limit Loan Facility

Fund managers don't like uncertainties. Retail investors don't know about this pitfall. If you look at charts throughout global stock makets for the past 2 weeks, whenever the headline from one of the 3 items appeared, the global stock maket dropped.

US consumer's confidence index is up for the 3rd straight month. Japan and Korea should be smiling after a week's drop. They export a lots of electronics gadgets to the US.

As long as these uncertainties haunt the stock market, the rebound will be limited. Item#2 from above will be resolved this week. Item #1 & #3 will linger around for quite some time. Item#2 will be replaced with refreshed fear of rate hike by US Fed.

Good Time to buy? Yes but buy a little bit at a time and don't get loan to buy as you may need to keep those stocks for a while.
Reason? No systemic problem with the US economy. But watch out for Dubai and Greece. Chinese government should be competent enough to prevent the building asset bubble.
Stocks to watch:
ETI TECH (good deal, Dubai's loss is your gain, stock at great discount price)
All the REITs (paying out good dividends, stable during correction, defensive)
Stocks to avoid:
Those with chart of reverse 'V'

The Bull is Tired

After running wild for weeks, it is taking nap and may be back for more. Gamblers are advised to be contended of their earnings and reduce the stake. Investors are advised to exercise with caution by reducing stock positions and increase cash on hand.

While waiting for tiger, the ox is taking a nap. It may be back for more in the afternoon.

We are just 19 days from Chinese New Year. Counting down... 19... 18... 17... 16...

TA or FA or just Follow?

There are three types of trading mentality:

1) TA - Technical Analysis
2) FA - Fundamental Analysis
3) Just Follow - Gamble or too lazy to run any analysis

Most investors are against type number 3. For Type 1 & 2, there is a big debate going around the world .

To me, everyone is trying to predict which stock that will be going up. That is the whole idea. Nobody wants to buy a stock that will go down and down. There is no point to argue about which type is better. But I notice something wrong with TA folks who always argue about their superiority. I later found out they have their own agenda of doing so:

1) They want quick money
2) They want other to follow (the more people who follow you, the chance of the stock to go up increases)
3) They own blog(s) to make money from advertisement (the more the reader, the more the income, some even sell e-books or collect illegal member fees)
4) They understand the fundamental of trade: demand up, price up

Those type of TA folks are preying on new comers to stock market to earn their trust. If they are successful in building their follower base, whatever buy call they make, the price will go up. Besides making money from advertisement, they make big money from stock market as well.

TA is just a way to look at the trend. It is able to detect hidden news that only insiders know. For certain stocks, if their fan base is using TA a lot, they tend to be accurate. Is it able to predict the future? Yes and no. Yes, if someone is trying to push for the stock they ran TA on it and the rest will get the same bullish signal. No, if no one wants to push for it. There are so many stocks to choose from. If a few TA followers spot on the same stock, the stock tend to go up as the demand goes up. That is why TA followers need to spread TA news around to make they TA technique work.

To me, it is a bit unethical although there is no law broken.



My rule of thumb in stock market:
1) No money fall from the sky
2) The demand goes up, the price will go up


Today update:
Malayisan stock market is holding up quite well despite there is a panic in Japan and Hong Kong. Singapore and Malaysia are sharing the same Chinese New Year bull force refusing to drop a lot. No sale today.

What is in store for next week?

Next week could be a turbulence week as there many are signs of bear coming out of the woods.

Anyway, the following bulls and bears indicators summarize this special phenomenon:

Bears:
- US Dow Jones dropped more than 200 points last Friday
- US President Obama's intention to control US Wall Street (Banking System)
- US Fed Chairman is be appointed to chair for the 2nd term but it is not yet confirmed
- KLSE is approaching Chinese New Year when people are planning to sell before the long holiday season
- Blogs and forums are getting bearish day by day
- Earnings Reports are still flooding in when the expectation is high
- US Unemployment rate could sustain at 10% and not going down
- China's government is trying to limit bank loan signaling a bubble in the making
- Genting Singapore has been downgraded by Citigroup

Bulls:
- Apple, Yahoo and Microsoft are expected to report good earnings
- There is no systemic problem with US economy
- Some investors in KLSE are still bullish especially counters that are still not up a lot in the past few weeks
- Many KLSE counters are expected to report good earnings and dividend


The US stock market doesn't like uncertainty. There are quite a lots of uncertainties in the US. But if the uncertainties are confirmed to be better than expected, the stock market can rise again. With most of the uncertainties are still in place, US investors will most likely take a cautious trading practice.

As for KLSE, there are still companies that are undervalue. A thorough fundamental check is needed to dig out those hidden gems.

Anyway, caution is the key to next week's trading. Be happy and life will be easy!

My Trades and Opinion for Next Week

Sold BSDREIT RM1.36 2000 shares. The profit is RM120 - RM30 (Transaction Fee) = RM90. I will post the statement slip after I receive it.

I bought the shares for three months at RM1.30 to test my holding ability. I used to be an impatient trader which cost me a lots of money. I treat them as lesson fees. I don't want to repeat the same mistake. I treat it as a way similar to stop smoking. Bad habit is hard to change.

My target for BSDREIT is RM1.40 or RM140 of dividend as BSDREIT was giving out 7 cents of dividend in February 2009. 20 lots of BSDREIT will give RM140 of dividend. But I choose to sell it off before I take the dividend to strengthen my cash position. RM30 is my stadard way of calculating buy/sell round trip fee for trades below RM3000. I don't get into detailed calculation unless my capital grows above RM100k. My current trades are too small to deserve any accounting pratices.

My premature selling of this stock is due to the unfavorable market condition next week and it is very closed to my target. REIT stock won't go up a lot. The gain is just 3.5% (RM90/RM2600) but it is still 1.5% higher than FD rate in Malaysia.


My take for next week?

The visit of this blog is going downhill just like the stock market. I think everyone is busy grabbing the last distribution of red packet money from the stock market to buy new clothes, furnitures and get ready for major housekeeping.

As I skim through the blogs and forums, everyone is still very bullish. But they are just retail investors who won't have the ability to move the market much. In every stock market, the biggest market movers are the fund managers. If they are bullish, the market will go up. If they are bearish, the market will go down.

First we need to understand why the stock market retreated for the past few days.

Yes, it is the US President Obama's intention to regulate the banking system on Thursday and Warren Buffet's negative view on US economy on Wednesday. One is the most powerful man in the world and the other is the most influential investor in the world. They both make statements that are against the current bullish stock market environment.

How about my take? I think it is still bullish as there is no systemic problem with the economy. President Obama and Warren Buffet were doing the right thing: to cool down the overheated stock market. Such correction is very healthy in the long run.

I will buy some ETI TECH as it is selling at a big discount and the downside is very limited as Emirates' investor have significantly reduced their exposure to this company. I may buy back some BSDREIT it falls to RM1.33 or lower.

Other shares that I have in mind is Astro (for medium term, will sell after World Cup 2010 started), HLCAP (still investigating), E&O (if it falls bellow RM1.00 or lower), BOUSTEAD (if it drops a lot), SUNCITY (if ti drops a lot), PELIKAN (if it drops a lot).

With such market condition, I will keep 50% of cash.

Cheap Stock Sale Finally Here?

1:00am: I guess so as US president Obama is trying to blame banks for causing this housing bubble and the bailout was solely to help banks using people's money. He wants banks to pay back the price for sacrificing the entire nation for their failures. Most importantly, he is trying to prevent the next bubble caused by those reckless banks by imposing regulatory changes to banks. What a heroic thing to do. Although I am a shareholder of Citigroup, I salute you, Mr President. The extreme greed in Wallstreet should not be tolerated. We are not the slaves of US' Wallstreet. Prudent regulation is the key for the survival of capitalism.

This is similar to Penang's initiation to push for "plasticless" Monday. A group of plastic manufacturers urged Penang's Chief Minister to take back this order just for the sake of this small industry. What a selfish thing to ask for. Those businessmen just take care of their own pocket and sacrifice the entire state. Luckily the Chief Minister knows what is right to do and firm in his stand to protect the environment. I salute you too, Mr. Penang Chief Minister. Money is not everything. What is money if your kids are plagued with higher risks of cancers that can be easily avoided and plastics that is hard to be recycled?


However, this may only cause a short-term panic to the stock market unless the US unemployment rate is up again which will be announced in the coming weeks. This announcement by US President Obama is unprecedented. That also caused the rise in VIX, USD and drop in commodity prices. The stock market may need some to adjust to this sudden change. Stock markets could suffer a shock. This could also be a good time to collect some stocks with good profit and growth if they fall substantially for the next few sessions in KLSE.

Cheap Sale in KLSE?

A lots of people are waiting for panic selling in KLSE today but it seems to be holding up well. So no discount today.

Emirates' investors finally offloaded a big chunk of its holding of ETI TECH shares yesterday and today. I am not sure whether they are holding any more but it is a good sign for ETI TECH or 'EDDIE' or 'ET', the nicknames I gave to this stock. Bad news is that Dubai or Abu Dhabi is in urgent need of cash. I am not sure how the bubble in Dubai will affect the rest of the world. Is it really resolved? It is still struggling? Or it is just matter of time when bankrupcy is imminent?

China's announcement of tightening its loan policy for banks sent a small tidal wave across the world. Combined with dissappointing Bofa (Bank of America) earnings result, US stock markets are not doing quite well yesterday.

Two bubbles burst. (US and Dubai) One is coming? (China)

The warning from Chinese government also sent a fear signal to Bursa Chinese stocks holders. MSPORTS, XINQUAN and XDL are being ignored or deserted due to this matter. The rally party was short lived.
Rotational jackpot still continues in Bursa. It feels like standing in a casino where people are buying and chasing hot stocks.

Will Warren Buffet's "To be greedy when others are fearful" work in this situation? No, as there is no fear. It should be the other way round. But the fear in US Wall Street overnight showed mild fear. Finally, everything gets balanced up as fear and no fear are in neutral state now. No too fearful and not too fearless. I believe the market will go sideway.

Jackpot Time?

Almost every session now in KLSE, you see stock with the surge of 30-50% within the first hour of trading. This I call "Jackpot".

Malaysia has very strong syndicates working behind the stock exchange. They usually introduce this "Jackpot" phenomenon to lure buyers.

Bursa sometimes gives them a UMA (Unusual Market Activity) suspending the stock for a short period of time, but it is no longer working. It used to work fine during its introduction to the system years back.

Stock market usually turns into a casino when it is closed to Chinese New Year.

During this time, long term investors will need to resist the temptation or give in to the temptation of fast money. A lots of people are winning the jackpots these days and I hope they can keep the money for the new year.

US: A rally that is due to a long weekend after people offloading stocks last Friday. A common psychology of an investor: I don't want to keep my stock over the long weekend especially during earnings season and the stock prices are almost over the roof! Citigroup posted a terrible loss and the share is up 3.5%! It is a bit hard to understand for many. Actually it is due to the offload of TARP that finally factors into earnings. TARP is like a timing bomb on a bus waiting to be set off. The bus driver has no control over what the timing bomb is for real or it is just a sensor. Citigroup is now back to a normal company without the handicap sign on the windscreen.

My Holding: Still as before. Tabung Haji bought 2 millions of Xinquan shares. I am also waiting for BSDREIT to announce dividend.

Up or Down?

Nobody knows. But I am sure it will flutuate between up and down.

People are getting impatient to make money nowadays. It is not a good sign as impatient traders are not long term investors. Imagine everyone is short term players in the stock market, what if everyone is selling? It is the long term investors that keep the stock market from crashing. There should always be someone who is holding the stock, right? The CEO? If CEO or board of directors or the companies themselves are supposed to pick up the stocks left by others, the company doesn't even need to be listed the first place as the directors or the companies are rich enough to fund their operations and projects.

For a healthy stock market, it is better to have more long term investors than the short term type. The lack of it will become another 1998 in KLSE. Someone likes to see the stock market crash as stocks are cheap at that time. But it can affect the economy very badly which results in high unemployment rate followed by crime rate (in third world countries only). Even if you are rich, your money and life are not safe. What is the point?

Back to today's stock market. Chinese shoe makers are getting a good comeback this morning session but it seems to be losing steam. My Xinquan is inviting a lots of sellers whom I believe got the shares for free as they are selling without looking at the price. If they are not getting those shares for free, they must be making big losses while the company is making big money. Nobody is as this unintelligent.

While rubber stocks are retreating its charm with the declining CPO, the chip stocks are getting cheaper as well. Year end is always a good time for Intel as companies are stocking up computers to sell. We can only see the true picture of PC market on 1Q of 2010. Those shipped computers may not end up in consumer's possesion. They may end up being displayed on the showrooms only or in the warehouse. We will see how the inventory posts any warning sign in Q1 2010 earnings report in April. Many pros may sell their shares in March in that case just to lower their risks in equity.

With rubber and chips less focused, woods and metals are having small party in the back yard and shoemakers are having their own small party as well today in KLSE:

KLSE is losing steam due to JAL announcement of bankruptcy that send Nikkei to drain. We will see more of this decline in the afternoon session. What's the worst thing that can happen to a company? Yes, bankcruptcy.

US will be resuming its trading tonight (MYT) after a president's day that is not supposed to be happy about as the Haiti's condition is getting worse. But there is no major economic bad news around the world except this JAL problem. Softness is to be expected next. US may have good earnings in the line-up but so are the expectations. If expectations are being set too high, dissapointment can send the trading mood lower.

Have a nice day!

Chip is not Cheap

As expected, the Nikkei reacted to last Friday's US stock market dip. The next is Hong Kong Stock Market. KLSE or Bursa is painting another picture. It is rotating its bet on the hot sector. Today's hot item: the chips.

Intel's hot earnings results were finally appreciated in Malaysia whereas the rest of the world already celebrated its success last Friday.

With declining interest to rubber, Malaysians are chasing a new sector, the chip sector. Most of the chip related counters are extremely high in PE. Those chips are not cheap.

People just dump their rubber and jump into chip obviously regardless of they are very expensive. To name a few, IPOWER, PENTA, REDTONE, ASIAEP, IRIS, ...

This is a very common phenomenon as people are rushing to chase after easy profits. It is just like in a super departmental store or mall. People rush to counters wherever there is a impromptu sales (discount) or lucky draw. The crowd is running around very happily like there is free food to give away. This is the time everyone thinks money does fall from the sky.

I was setting a few queues to buy something. Looks like it is not my cup of tea today as I don't like to run around chasing for free food. I believe in hard work and real profits. Young people should have the energy to chase around. I don't belong to that age group anymore.

To Buy or Not to Buy? Part II

When the pros are reducing their stakes in stock market, the new hands or low income individuals are increasing theirs. This is a heartbreaking situation as the weak will be holding the stocks when the prices start to collapse. This is the truth of a stock market. There should always be someone to hold the hot balloon. Anyway, I am not saying the KLSE will be having a correction soon, stocks are just overbought. One can easily tell by looking at the PEs. An orange can cost 10 cents when the demand is low and cost 10 ringgit when the demand is high. Now a KLSE orange costs around 5 ringgit. There are still rooms to grow to 10 ringgit per orange but the risk of dropping back to 2 ringgit is getting higher and higher. (assuming stocks have unlimited supply - there are always sellers for almost any KLSE stock)

Smart or experienced investors know when to buy and when to exit. Novices tend to just follow others to make quick money. Greed is something hard to control.

Intel Thursday good profit news were expected make a good impact on stocks on last Friday but the opposite happened. It was due to the USD problem again. As US economy is improving, the USD will shoot back up which caused the commodity and energy stocks to retreat. Last Friday was plagued with this curse again. The rising USD may once again press the equity down but for how long? It depends again on the next unemployment report. As earnings season in the US has kicked started with mixed result, Alcoa and JP Morgan are showing weakness in the revenue and Intel is showing the opposite. I suppose profit will be less focused in this earnings season and revenue will play a bigger role as it reflects the consumer spending capability. Profit can be easily manipulated but you can lie about revenue. That is what most investors will be paying attention to.

My current holding positions in Bursa is small. There is nothing much to worry about. The question now is again "To Buy or Not To Buy"? I have several picks in my head but I will only reveal after I bought them. I don't want to influence the market or let unscrupulous traders to buy before I buy. They are for short term only. It is dangerous to keep stocks from now until April. Hope they are good buy and not good bye.

Dow's Down. What's Next?

Everyone seems eager to know what is going to happen on Monday.

Classic response to this is "dip in the morning session, may recover in the afternoon".

Dow finally gave up its complacency for holding up gains even there are bad news. Dow is finally back to normal.

Back to KLSE, up or down? In fact, I need to check out blogs and newspapers to see everyone's reaction. People tend to be driven by news and gossip. I hope what I mention here doesn't affect the market trend on Monday. It's sad if people follow what I said as they've lost their brain to analyse themselves. For people who don't know how to make simple analysis tend to lose control over tough situations in their life. Not just investment decisions.

Eventually, desparate buyers will push the price up and desparate sellers will press the price down. This law of trading is fixed and no one can change that. The lack of desperation in any way will just result in stagnant stock price.

In a KLSE forum, I see the desparation of buying. In blogs and newspaper, everyone is talking about a pre-CNY Bull market. The sentiment is "fearless". The opening of Monday may not be good but there will be a lots of bargain hunters that make stock prices fluctuate quite a lot. Bull is still winning but may be waning too.

I believe many will have stock list in mind and buy when there is a dip in Monday morning.

Here is something to wish everyone good luck:

The Hot Wind and The Calm Wave

Hot Wind: KLSE

Why? People buy anything that is in the top 10 active list. Traders are looking for potential surge stocks by asking around. This is a warning sign for experienced traders. The bubble is getting bigger. The CNY of 2007 paints a clear picture of how such bubble was inflated and burst.

Calm Wave: US Stock Markets

Why? US has been in the sideway mood for the past few sessions despite various bad news. Even the Obama's intention to tax bank isn't strong enough to shake Citigroup share price. Intel strong PC sales figure might stir a rally in the US tomorrow.


Conclusion: Wish good people make more money than bad people as in stock market (usually it is the opposite), some people will win and some people will lose. There should always be someone who is holding the hot balloon.

The Feel Good Factor - The Stock Market Wisdom

Why do people lose money in a stock market rally?

Simple, during a stock market rally, people will follow tips to make fast money.

Usually tips given are of "syndicate" type not the "good company" or "cheap stock (low PE)" type.

These "syndicate" type stocks are expensive.

You bought expensive stocks and you expect to make money? Sure experienced traders can make big money from such rally. Syndicates need to reward some to lure more. Just like the first prize of a lucky draw. If the prize is lucrative, there will be more people participating. More participation means more sales. More sales mean more income for the organizer.

For me, the feel good factor is very important. Even if you lose money, you need to feel good. Even you make a mistake, you need to feel good. What's the point of investment? To feel good. What's the purpose of making a lots of money? To feel good. If you feel bad after making mistakes or missing a boat, you defeat the whole purpose of investment: to feel good. Even if you feel good at the end of a big profit, you cannot compensate the bad feeling you had in the past. You conflict with your own purpose and you will repeat the same mistake in other area in your life, not just in stock market.

Therefore, the feel good factor is very important in investment in stock market. Even if you make a stupid mistake, try to think that you have tried your very best to invest, to a brighter future. Learn from the mistake and really accept your mistake, you will get more mature in stock market and you will finally understand why 90% of the people lose money in stock market and you will feel very good conquering yourself and uncovering the stock market myth.

Rubber Deserted. Welcome Furniture Wood and Metal.

Syndicate's rotational play continues. Rubber related counters are no longer favorable. They are similar to squeezed lemons. Today it looks like metal is the new black. LEADER will be a signal to lead to this metal area. And LEWEKO may be a speculation of CNY can promote hot sales on furnitures.

Gamble at your own risk.


UPDATE: LEWEKO is not a major furniture seller. It's just an investment holding company for wood related products and services.

Chinese government is trying to signal a potential property bubble that leads to this correction. XinQuan will be less focused. Metal stocks will be in focus next. Bought 10,000 shares of MELEWAR @70 cents.

Shares on hand:
BSDREIT 2000 shares @ RM1.30
XinQuan 5000 shares @ RM1.20
Melewar 10000 shares @ RM0.70

Buy order of 10,000 MELEWAR @ RM0.70

Not for gamble but for value and growth. Please try not to follow my purchase. I don't want to use this blog as a protection for my holding, as promoting shares on blog to solicit buyers to prevent shares from falling hard is unenthical in my opinion. This blog is to record a "WHY" things happen not "HOW" to become rich and "WHAT" to buy or to compete with other smart investors. A blog is just a journal. Eventually, I hope I can show you a nice path to good investment practices if my methods are proven to be successful.

What's going on?

The dollar is falling and the commodity prices are reversing trend.

The unemployment rate in the US is the key:

Note that when the unemployment improves, the USD will go up (red). If unemployment rate is worse than expected (green, dissapointment), the USD will dop.

Overlapping the unemployment rate with DXY paints a clearer picture. Sorry in fact the unemployment delta chart should be used to show the difference between sequential month but this is good enough to show the trend.










Now what? Commodity prices will resume its uptrend. All those gold, O&G, metal, plantation related stocks will be the targets for many short-term buyers. If you know why they are going up, you should know when they will go back down. Yes, if US unemployment rate improves or US Fed raise interest rate. That is the time when USD will go up. As for Malaysian stock market, it is now displaying a "rotational play" trend by syndicates. It is an usual trend before CNY although SC may see it as unusual market activity. I do agree with SC Malaysia.

Hope you like this sharing.

Volatile Trading Day?

As mentioned yesterday, it is going to be a volatile day:

This is just the morning session. We will know whether this volatility continues until the end of the trading session.

There are people who are willing to buy and they are people who are scared due to mixed bull and bear news. Volatility is the result. But this only shows the 30 Bursa index shares.

Closing Update:

Classic opening with fear (bear) factors, followed by bargain hunting activities from 9.30am to 10.00am. The uncertainty phase is domainated by news of US accusing China for exporting toxic material. Since HK is not influenced by this news after an hour of opening trading, Bursa charged on from 11am to 11.30am. After that, series of profit taking activities were taking place until closing. The morning session is volatile but the afternoon session is not.

US will need to face falling USD problem tonight. Usually commodity prices will go up as a result followed by surge in equity unless there are more bad news.

Bull vs Bear

Next week will be an interesting week with bulls and bears ramping across the same plain:

The bull factors
- CNY in the horizon (Asia)
- Gambling mentality is the highest stirred by rising prices (Asia)
- Forums and blogs are making buy calls (Local)
- Everyone is seeking a fast way to make quick money for Ang Pow as bonuses are being cut across the employment market (Asia)

The bear factors
- US unemployment rate is not improving (International)
- JAL will be announcing backrupcy soon (International)
- Malaysian vandalism to religious structures (Local)
- Rising toll price in Malaysia (Local)

My call
- Volatility

I believe the market will be quite volatile next week as bulls and bears will be gambling on the same table. Interesting week ahead. Get yourself ready for the ride!

US Unemployment Rate

Here is a chart I compose using Excel:

The bar in red shows the key data announced last night in the US.

What does it mean?

US has the largest consumer base in the world. If the unemployment rate remains at 10%, it is not going to help the global economy. There are a lots of people in China and India but their consumption cannot compare to the US.

The good thing is that the earth is "greener" if global consumption goes down. But the world population is increasing at a fast pace.

How does it impact the stock market? We first need to look at USD. DXY dropped 0.5% which is pretty huge for one day. The US Fed may not raise interest rate that quick although it has informed banks that it is imminent.

USD has a very close relation with the US unemployment rate. Since US is having a consistent unemployment rate of 10% for two consecutive months, I expect the USD will go sideway.

If USD goes sideway, so is the stock market. But the world was expecting a better a better employment picture in the US. Those who had high hope may start to reduce their position in the stock market as well as USD.

Have a nice weekend!

XinQuan or not XinQuan?

The demand for the stock has diminished and so are the rest. This shows that the earlier demand was due to stock-chasing mentality and not its value.

I have been making a lots of trades for the past few years and the result is not encouraging.

I notice one thing that those money making folks share in common: patience.

In Chinese, it is called "总有一天等到你". A favorite slogan used by coffin maker.

If the stock you are holding is of good value, you have nothing to worry about. Just make sure you don't dump everything into one basket only. Good company can also face bad things some day.

I notice people in a  forum (better not mention the URL) make money from this simple principle: patience. Every stock rise at different timing. Don't ever expect the stock you buy go up all the time. You are not God or some sort of supreme being. You are only human. Those who have patience, make a lots of money. Those who are not, get confused between loss and gain.

Still holding on to 5 lots of XinQuan and 2 lots of BSDREIT.

12.25pm Update: For new IPOs, there are always people who got the shares for free such as staffs, managers, and directors. They don't care about the price they sell. They need cash before any festive season. Since they got the shares for free, they just sell at any closest price without lining up in a queue. This is a bad side of buying an IPO share.

How to spot a bubble?

What is a bubble anyway? The rise of price or business activity that doesn't reflect the real demand?

We need to look at chart.

Here are US Housing Price Index (US housing bubble) and the Baltic Dry Index (Pre-Olympic Bubble):

Do they look similar? Now you should be able to check out the stock with such potential.

The common mindset of bubble is that the sky will drop money. When everyone is making money, others will follow and forgot about one basic rule of supply and demand.

Money doesn't fall from the sky. You can sell a rare item for a high price. But if it is rare, the supply is low. If the supply is low, your high price is justified.

If the price is high while the supply is also high, just like the US housing supply and shipments to and fro China, something is wrong and a potential bubble will be formed.

For stock market, PE is to decide whether the price is justified or not. Consistency in PE or PEG is also important to check if the earnings is not manipulated. But most people think that share prices can go up a lot even if the company is not making money. But where do the money come from? During IPO, shareholders contributed fund for the company to do business. The money you bank in to CDS is real money right? Is it from the sky? The company then use your money to buy things to do business. The money is real right? Then the business start making money and the money is real right? How do you think you can benefit from the earnings from the company?

It's all about profit. And it's also about growth. Just like your shop. If your shop is making money, you need to share it with your business partner. A listed company is nothing different. They are also not allowed to print their own money and distribute as dividend. Hope young people these days know where the money is actually from and the sky doesn't drop money. Just like when you buy a share you need to pay real money from your bank account and also the person who sell you the share will get the real money from you.

Sorry for being carried away. This is a very common mistake in KLSE where people have a very shallow knowledge about money. They still think money can be manipuated to grow not by real business profit. Yes, it is able to grow but not for too long. When market is bad, professional will evaluate your company business condition to judge the value of your stock. If it is cheap, people will buy or hold, and the share price will not drop much.

Pullback?

Last night, US released a few key news that will impact world market today:

1. Pending Home Sales declined 16% in November

2. Factory Orders rose 1.1%

3. GMAC expects $5B 4Q loss, selling mortgage assets

1&3 are very bad news while 2 is a piece of good news. As news#3 just came out an hour ago, it could be very nasty piece of knife that cuts through the global equity gain momentum.

News#3 could have lingering impact to the US stock market tonight. Moreover News#1 & News#3 are related to mortgages and assets.

Yesterday's crazy rally will have a T+3 this Friday. We'll see if this housing problem persists until Friday. If it does, it could be ugly for contra players but good for budget hunters. If there are too many budget hunters waiting, there won't be any sharp dip unless there is no budget hunters.

4pm: KLSE resumed rally in the afternoon. I guess the CNY rally will be strong this year. Hang on to your holding and you may see the light before CNY. The problem is that most people will sell before CNY. What happen after CNY?

The Bull is Back!

As opposed to my yesterday's post, KLSE is back on business. There is a rally towards the last section of KLSE and also in the US stock market.

Added 3000 shares of XinQuan yesterday @1.21.  (Sorry no screenshot, will take a digital photo once I get the physical statement)

UPDATE: Scanned statement. Better than screenshot.

The senseless bull is back. This is a common sign before CNY. Experienced traders know that if such surge continues for certain period of time, aunties and uncles in the "pasar" and "kopithiam" will start talking about share market and trading hall in the investment bank will be full of people just like the turf club. That's the time, experienced traders start selling at a good price waiting for a one-day sharp drop. Since it is just the beginning of a hot pre-CNY traditional hype market, it's still safe to make some quick cash. But one should know this rally won't last. It's just a tradition.

Just need to watch out for potential bubbles: Dubai, Chinese property market, etc. Any of those time bombs set off, there will be a sharp one-day correction like it always comes. That is also a buying opportunity. But don't buy too much as the correction may come again a few days later like in CNY 2007.

Economy is slow and world markets are not as slow. What do you expect?

First day of trading in 2010!

The bull is a bit tired by looking at KLSE, Hong Kong and Singapore indices. At 12.30pm, Hong Kong is dipping quite sharply. Not a good sign to kick off a year.

All the charts in the world indices show tiredness after the record breaking rally of 2009.

Since CNY is not far in the horizon, it is not a bad idea to check out the Shanghai index.

The red circle highlights the correction in 2007 after the CNY. The bubble was boiling before the CNY due to the belief that year of pig will bring good fortune. Anyway, the correction looks small compared to the whole year performance. It was just a hype that every was speculating on the coming Beijing Olympic. Anyway, the bubble burst at the beginning of 2008 before the Beijing Olympic.

Shanghai then had a good run in 2009 and what's in store for 2010? Everyone seems to have this question and the coming CNY rally may depend on this as well. The chart looks weary for all indices including Shanghai index. And most likely it will keep that way by looking at the Baltic Dry Index I mentioned earlier.

Anyway, good value stocks will perform well as no one can resist good earnings and that is why PE and PEG are important for 2010 after all stocks have almost reached their all-time-high. It's back to the value assessment game. I bet all analysts are busy crunching numbers to find cheap stocks based on PE and PEG in order to squeezed the juice out of the drying stock market. Some even suggest a rest of a few months is a good strategy. I don't want to miss out the CNY rally and I still pay attention to good value Chinese stock listed in Bursa.

Xinquan is the only stock I like for such category. I'm looking for other non-Chinese stock as well. Any suggestions?

The Rise of Sugar Price

This is a hot topic these few days. As everyone has already made their conclusion and I don't really need to voice my opinion in a lengthy way as planned.

Winner: Kopithiam owners. 10 cents per cup of drinks will increase their profit substantially as sugar price has only increased by 20 cents per Kg. Sugar makers and distributors are beneficiaries as well.

Loser: Consumers.

Things may change as people may not want to go to hawker stores as frequently and they may consider take-away. In addition, the rise of beverage and sugar related product price may cause others' price to go up as well.

To Buy or Not to Buy?

As US DOW closed down 120 points on the last day of 2009, the rest of the world could follow the downward pressure on the first hour of trading on Monday morning. That could posts a good buying opportunity for the coming CNY hype.

Chasing stock to sell on hype is not a good practice. That's why I'm so undecided whether to buy or not to buy. Since there will be a CNY hype on Chinese stocks, XinQuan comes to my mind. I like this stock as the earnings looks very good. Although it is still unproven as it is just IPOed in Malaysia, it is still a good buy (hopefully not good bye) compared to other Chinese stocks.

The sudden buying interest shown in the last trading day of 2009 can be a good sign as people may finally discover its value:

The coming annoucement of dividend may send this stock to a pleasing level and I am so tempted to buy more. As the dillemma goes on, it is better to talk more on the problem of chasing-the-hype mentality.

My verdict is ... it depends on whether it will drop back to 1.18 or 1.19 level on Monday morning. I am quite sure it will have a good run before CNY. I will post if I make any changes to my holding of this stock. Stay tuned!

First Blog in 2010!

It's 2010, the year's figure looks futuristic. That's the first impression that came to my mind when I typed the title. There's no judgement day, no mass flooding, no flying cars, no robot slaves yet, everything is as usual quite similar to 50 years ago except there are cellphones and computers everywhere.

I see blogs and articles everywhere mentioning the past and coming decade, comparing their differences and expectations in the years to come. Almost all predicts a slow growth in 2010.

What is growth anyway? Turning natural resources into currencies?

Sometimes, I think we are better off being conservative than innovative. What is a cellphone made of? What is a computer made of? How much natural resources we need to sacrifice in order to make a computer or cellphone? Can we use money to turn back into natural resources? No. But we can turn some back into unnatural resources.

I may sound pessimistic but that's the fact. The world has been blindfolded by greed, especially the greed of feeling good at the expense of mother earth. I may sound very Na'vi (from Avatar) but it is what I always think before I watched the movie. I like green tech, I like solar power and I like recycling. That's who I am. People just don't see the consequences of indulging in short term pleasure, how much we sacrifice our future just for the spark of joy that will not last very long. If everyone on this planet can sacrifice 10 seconds of joy a day, the world will be a better place.

Some may think that' s a very negative thing to happen to wall street or the financial world as people consume less. I have a different opinion. Advertisements encourge joy indulgence to stimulate growth. The growth turn into profits and revenues, and eventually employment. Why do companies employ employees? To handle tasks. Can't we hire people just to create value-added or new inventions to the company rather than just sell more? The demand is always up and down. Unless there is no competition, the demand will be up proportionate to the growing population. In order to sustain capitalism, we cannot just count on consumption. We need to also inspire invention, inventions that benefit human and secure human's future. I like the current administration encouragement on developing green technology. We can actually reverse our capitalistic negative consequences to secure a better future. We can spend money on human resources to develop ways to reuse our rubbish, obsolete computers, cellphones, etc., to generate energy and new gadgets without polluting the environment. We can also think of ways to recycle waste into "unnatural resources" and resell them or reuse them to make new stuff. This is an area that cannot be ignored. If the idea is ground-breaking, it can actually promote employment.

This is just an idea. I'm sure there are still many other things that is doable. As our natural resources are depleting quick due to consumption to turn into profits and revenue, we actually don't have much time before the time bomb is set off. Historical facts tell us that there will be correction, either war or natural disaster to reduce the population in order to balance the system.

Having said that investing in stock market is crucial to those who are not that good in grabbing cash in the piramid system. Top management are substantially rewarded for their ability to plunder natural resources. What's left for the rest? Not much. Stock market is one of the hopes left for everyone else, to sniff the remaining scent from the gobbled flowers.

Hello 2010! Here I come...