I can start buying

I may think that the STI is only half way through a correction, but stocks are stubbornly refusing to fall further, but instead clinging on to meaningful supports. Of the stocks on my radar screen, Noble is well supported at 1.98 (61.8% retracement), NOL at 2.10 (50% retracement). Genting, a stock I was initially not looking at, is becoming attractive. It is supported at 1.93 (61.8% retracement), and is rebounding from oversold RSI. The last time that RSI was oversold was way back in April and of course, we know, the stock rallied hard by 170% afterwards. So, Genting is my choice, and I will be scaling in my positions on this counter, with an aim to evenually build a 10-lot position for its next peak by April 2011.

Correction is not over

I reckon that the surge yesterday in our markets are more attributed to a technical rebound. Overall, I do think that the "broader market has further to fall over the very near term. We’re in that lull between earnings seasons, and investors are much more likely to pay attention to bad news. If we get a further correction in share prices over the coming weeks, then we’ll have a good entry point for new positions. My best guess is that we’re not quite there yet." (Ahead of the Street Column, by Mitchell Clark, B. Comm)

Stock Market to crash in May 2011?

We have read about many predictions on market crashes since the Great Stock Market Recovery of 2009, but of course, now we know that they are all proven untrue. But of course, now that the bull market is in a more mature state, the arguments for a fall seem more convincing. This article details the reasons that may precitate such a fall in the stock market. It is predicting this to happen by May 2011.

But then again, as a value hunter, it is our mission to hunt for good deals during a crisis like this. So, I await greedily for such an opportunity. But, I may be disappointed again, as so many times in the past, such predictions always did not come true.

Turning cautious on China stocks

Martin Lau's First State Regional China Fund has been generating top-notch performance in recent years. However, he is turning cautious on China. Why? One, the recent wave of optimism about Chinese stocks especially in consumer and pharmaceutical has become too euphoric for his liking. Two, many investors are so passionate about IPOs, and that is usually not a good sign. Three, further raising of interest rates by the Chinese government could cause Chinese stocks to tumble. Lau reckons there will be a series of rate hikes.

Lau has been cutting exposure to overpriced Chinese consumption stocks and remains light on property and financial counters. He is currently vested in property names like China Vanke and China Resources Land, bank China Construction Bank and consumption play Yantai. But all in all, he is not that excited about China anymore.

It is too late for me to take profit on SOHO (a property name) now, but I will sell it during the rally that follows this correction.

Update: I have sold SOHO at 6.32 on a brief rebound for a 29% GAIN IN 3 months.

What really is market timing

This article extols the true meaning of what is market timing. Often, we are taught to time the market by cutting losses (selling when market is low), and letting profits run (refusing to sell when market is high). This article tells us that contrary to popular belief, market timing is to sell at high, not at low (to cut loss).

What can I buy during correction

One of the best things is that the good stocks also gets whacked during a correction. Therefore, the most logical thing to do is to load up on good stocks. Definitely, to me, this means stocks in the Straits Times Index. I am looking greedily at SembMar ($4.50 -$4.60 will be good price, below $4.50 will be super bargain price), SembCorp ($4.50 - $4.65 good price, below $4.50 super bargain price) and Noble ($1.90 - $2 will be good price, below $1.90 super bargain) again. I am also looking at STX OSV (below $0.70 would be a steal) as I feel that it is just unlucky to be listed when there is a correction. This one is definitely unfairly sold down.
I am not looking at Genting as I feel prices have peaked, and may not rise very much in the near term. Finally, I am looking at gold ($125 - $129 good price, below $125super bargain).

The correction has most likely come, but it is time to buy

Given the massive sell off in equity markets, one can't help but conclude that the inevitable correction has finally arrived. But fear not, as I think this creates another good opportunity to load up on stocks. Prior to this correction, I have sold various positions in SembMar, NOL and Noble. For various reasons, I am still holding on to gold, BOA and SOHO. I have done an analysis on my performance, and found that there is much to improve upon. Of the counters I sold, I managed to garner the following "batting average", or percentage of the move.

NOL 38% for 7% gain
SembMar 33% for 12% gain
NOBLE 65% for 19% gain

Verdict: I sold too early.
AFI: Need to develop more nerves of steel in order to maximise returns from current bull market. Remember, before I know it, the bull market may be over, so make the hay while sun still shines.

Interesting article on market correction

An interesting article on how we should be rational, not emotional, during a market correction. I love the concluding paragraph "Remember, just because you follow the majority of people, doesn't mean the majority of people aren't wrong. That's why 95% of investors aren't driving Mercedes and living in Key West three months out of the year. Base your decisions on analysis and value and you will, more often than not, come out ahead."

$2,000 is the price that I will sell out my gold for

Is the gold bubble bursting? Like Peter Grandich, I think gold is half way through its rally, and will likely enter a parabolic phase of volatile but phenomenal increase before its final decline. Which means, that in this correction, I should be adding on to my position, and then wait to sell when gold eventually reaches $2,000. When will it reach this price target? Anytime in 12- 36 months.

My learning journey 2010 Part 2

Even as I have enhanced my portfolio performance over the past few months, I still have a lot of room to improve upon. I am currently exiting far too early in my positions, resulting in far less gains than the market wants to give me. Why am I not getting the desired returns? It is because I have not perfected the art of staying disciplined over the long haul. From now on, I need to remember (adapted from the book "The Guru Investor"):

1. It is essential to stick to my strategy for the long term. Even the best strategies have down periods, and it can sometimes take over a year to reap the benefits of a good method. If I try to time my use of a strategy, I'll likely miss out on some big gains.

2. Be prepared for short-term 10 to 20 percent downturns that are inevitable in the stock market - and the less frequent but also inevitable 35 to 50 percent downturns I will occassionally experience. I can't predict when they'll happen, but I will just have to roll with them if I want to reap the market's long-term benefits.

3. Give the internet a rest (my exiting my SembMar positions so early is due to this bad habit). Checking your portfolio every day, let alone every 10 minutes, can make you jump in and out of the market, which hurts my long-term performance.

My learning journey 2010 Part 1

"If investing is entertaining, if you're having fun, you're probably not making any money. Good investing is boring." - George Soros

"The essence of mathematics is not to make simple things complicated, but to make complicated things simple." - Stanley Gudder, Mathematician

I am still learning, but I came to truly understand the above two statements this year. Before that, my trading was complicated and confused. I was also easily influenced by "noise." Which meant, that one moment I would be buying, and the next, I would be dumping wihout good reason. This brought me erratic results. Then one day in July, I met a "guru". Ironically, he was trying to sell me his services. He was churning unit trusts. Although I did not buy his service, what he said stuck. He said "Stocks always go up in the long run, so why worry about the short term? Very few people make money by jumping in and out of the market." I have since adopted an investment approach to my stocks. But instead of unit trusts (which I don't like because of high transaction costs), I am buying good stocks (blue chips). Ever since, I have enjoyed much better results. I have come full circle in my learning journey.

N.B: I am eyeing only to buy stocks two times a year from now onwards. The rest of the time, will be spent waiting for prices to go in my favour.