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...

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!