Finally, after almost one year of holding BAC, I have decided enough is enough - I have cut loss on it. Why? Because, market is so good, and yet it is moving down. What if market sentiment turns poor again soon (very likely in this volatile environment)? Of course, I could treat it as a long term investment, and even "average in", but the opportunity cost is too high. Why not use the funds available for other better performing stocks?
This is the worst trade that I have made all year long since 2010 - holding on to a loser for an extended period of time. The finance charge + the currency devaluation + the loss in share price possibly comes up to about $2,000.
Lesson: Never buy a share on a downtrend (different from buying during a correction or market panic), and never forget to cut loss even if I intend it to be a longer term investment.
Saturday, April 16, 2011
Tuesday, April 5, 2011
Has the Singapore bull market ended?
This report by Fundsupermart (dated 24 Nov, 2010) argued for why the stock market rally in Singapore is not yet over.
1. The average bull run in Singapore has lasted about 900 days, and yielded 178% increase. Currently, our local bull run is 700 days old, and has increased about 130%
2. For STI to be stretched, its P/B ratio needs to be 2.12. At Nov 2010 level of 3300, its P/B is only 1.76, still a healthy level.
3. The stock market usually breaks its historical high on its way before its bull run comes to an end.
4. It estimates STI needs to reach at least 3600 - 4000 before reaching maturity in bull run.
In short, reiterating the view in my past few articles, that the bull run is not over yet. But then, the end is not really that far away. Could be by the end of this year.
1. The average bull run in Singapore has lasted about 900 days, and yielded 178% increase. Currently, our local bull run is 700 days old, and has increased about 130%
2. For STI to be stretched, its P/B ratio needs to be 2.12. At Nov 2010 level of 3300, its P/B is only 1.76, still a healthy level.
3. The stock market usually breaks its historical high on its way before its bull run comes to an end.
4. It estimates STI needs to reach at least 3600 - 4000 before reaching maturity in bull run.
In short, reiterating the view in my past few articles, that the bull run is not over yet. But then, the end is not really that far away. Could be by the end of this year.
Monday, April 4, 2011
Stock market bull run is only half way through, says Birinyi
The stock market is only about halfway through a bull run that will catapult the Standard & Poor's 500 another 60 percent over the next two to three years, well-known stock analyst Laszlo Birinyi told CNBC on 23 Mar 2011.
As many other market pros await a pullback, Birinyi, head of Birinyi Associates, anticipates that the market will continue the rally that began off the March 2009 lows.
The surge paused last summer but has run full steam until the violence in Libya and the crisis in Japan interrupted it over the past month.
"The last bull market was five years. We're still looking for (this) bull market to last four to five years," Birinyi said. "If we cobble together all the long bull markets, we come up with a historical projection of about 2,100 out two or three years from now on the S&P."
The projection, while bold, is actually a good deal less avid than an outlook from the firm earlier this year.
In a research note sent to clients in January, Birinyi's firm forecast that the S&P would hit 2,854 on Sept. 4, 2013.
As many other market pros await a pullback, Birinyi, head of Birinyi Associates, anticipates that the market will continue the rally that began off the March 2009 lows.
The surge paused last summer but has run full steam until the violence in Libya and the crisis in Japan interrupted it over the past month.
"The last bull market was five years. We're still looking for (this) bull market to last four to five years," Birinyi said. "If we cobble together all the long bull markets, we come up with a historical projection of about 2,100 out two or three years from now on the S&P."
The projection, while bold, is actually a good deal less avid than an outlook from the firm earlier this year.
In a research note sent to clients in January, Birinyi's firm forecast that the S&P would hit 2,854 on Sept. 4, 2013.
Sunday, April 3, 2011
Dangerous Bubble vs Healthy Bull
So, when is the rally dangerous? The diagram (source: James Stack)above explains.
Saturday, April 2, 2011
Penny stocks are coming to the forefront - does this represent the beginning of the end?
As I scanned the SGX website today, trading is clearly dominated by penny stocks - Dyna-Mac, Ramba, Jaya, Swiber, Ausgroup, Mewah etc. In 2007, months before the market began its deep descent, I remember penny stocks grabbing the spotlight. Could a similar situation unfold?
Many experts (Michael Lombardi and many local "gurus") have turned sceptical on the stock market since the arrival of 2011. They expect a bear market to arrive by the 2nd half of this year. After all, this rally has been around for 2 years. Should we believe them?
In an article written by James Stack (Chief Editor, Investech)"This Is No Bubble—It's an Unloved Bull" on 23 Mar 2011, he argued that this bull run is only half way through.
First, the same psychological ingredients of a bubble that we recognized on Wall Street in the late 90s and in the real-estate market in 2005 is just not present. Valuations are nowhere near the extremes that would constitute the dangers of an investment bubble.
In 1999, at the peak of the high-tech bubble mania, the S&P 500 Index sported a lofty price/earnings ratio of 33.9, based on trailing earnings. Today, the same trailing P/E ratio for the S&P 500 Index is less than half of that level, at a moderate 16.9. The 80-year average valuation is 17. In short, you can’t have a bubble if there’s no extreme valuation, because there’s no excess air to let out.
Another important historical observation that he made is that rising oil prices do not cause bear markets. More often than not, oil prices rise in tandem with an economic recovery and healthy bull markets.
Does this mean why Warren Buffett and John Paulson are still in the market? It must be so.
Many experts (Michael Lombardi and many local "gurus") have turned sceptical on the stock market since the arrival of 2011. They expect a bear market to arrive by the 2nd half of this year. After all, this rally has been around for 2 years. Should we believe them?
In an article written by James Stack (Chief Editor, Investech)"This Is No Bubble—It's an Unloved Bull" on 23 Mar 2011, he argued that this bull run is only half way through.
First, the same psychological ingredients of a bubble that we recognized on Wall Street in the late 90s and in the real-estate market in 2005 is just not present. Valuations are nowhere near the extremes that would constitute the dangers of an investment bubble.
In 1999, at the peak of the high-tech bubble mania, the S&P 500 Index sported a lofty price/earnings ratio of 33.9, based on trailing earnings. Today, the same trailing P/E ratio for the S&P 500 Index is less than half of that level, at a moderate 16.9. The 80-year average valuation is 17. In short, you can’t have a bubble if there’s no extreme valuation, because there’s no excess air to let out.
Another important historical observation that he made is that rising oil prices do not cause bear markets. More often than not, oil prices rise in tandem with an economic recovery and healthy bull markets.
Does this mean why Warren Buffett and John Paulson are still in the market? It must be so.
Friday, April 1, 2011
1Q 2011 Performance
1Q 2011 has ended, and it is time to take stock once again. Although it had been volatile, and I was right to exit certain positions (Capitaland & Wilmar) prematurely, I was wrong to exit others(think Zhaojin, Gold, SGX and F&N) prematurely too. I would have mostly been better off had I stuck it out. But it was often not to be.
Still, for the quarter I managed a 45% return on capital. Not a bad feat. My aim for the year is 100%. From now onwards, I expect to be more steady in holding on to my positions, and do less churning (one day in and next day out). Stick to the plan, no matter what.
Many people are calling for an end to the bull run by the middle of this year. Personally, I am less sure of the direction (explains why I am churning more). But I believe if the trend truly changes, I can still make money, by getting on the short side. So, time to be flexible.
Still, for the quarter I managed a 45% return on capital. Not a bad feat. My aim for the year is 100%. From now onwards, I expect to be more steady in holding on to my positions, and do less churning (one day in and next day out). Stick to the plan, no matter what.
Many people are calling for an end to the bull run by the middle of this year. Personally, I am less sure of the direction (explains why I am churning more). But I believe if the trend truly changes, I can still make money, by getting on the short side. So, time to be flexible.
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