The causes of the previous financial crisis have not been resolved

Mark Mobius , executive chairman of Templeton Asset Management's emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven't been resolved. "There is definitely going to be another financial crisis around the corner because we haven't solved any of the things that caused the previous crisis," Mobius said at the Foreign Correspondents' Club of Japan in Tokyo on Monday (30 May 2011) in response to a question about price swings.

Just as Marc Faber is the perma-bear, Mark Mobius is the perma-bull. To have him say such a thing, definitely he is very sure of it. But if we think about it, why not, since, it is only natural that things go from good to bad, and then back to good. So, it is only logical that Mobius said "with every crisis comes great opportunity, when markets are crashing, that's when we're going to be able to invest and do a good job."

I have been buying gold - via gold-mining companies

According to some, gold is going to $1600 soon.

According to this article, shares of big-cap gold mining companies look inexpensive right now, as compared to the metal's rise.

Which is why I have been loading gold mining companies for the past week, and will continue to do so following corrections in the price of gold.

Are they buyable currently?

CNOOC: Very buyable at currrent price, 18.14. Will initiate some. Oil prices will climb again.


Zhaojin: Very buyable, esp. if I continue to believe gold prices will climb, which I do. HK$15.58. Will initiate some.


Local:

SEMBMAR: Very buyable given impending slew of orders and current price weakness. Will initiate some. Oil prices will climb again.

What stocks to buy this round?

If my prediction of a June correction comes true (I still belong to the Long camp), I will seriously look at these candidates:

Overseas:

CNOOC
Sands China
SJM
Wynn Macau
Yanzhou
Zhaojin


Local:

F&N
SEMBCORP
SEMBMAR

Wild Card Bet: Wilmar

Is prediction that the market will rally soon too soon?

Someone just predicted over his blog that the market will rally soon? Should I blindly follow?

Let's investigate:

Main indicators:

DJIA: Not yet at B.P., Uptrend
DAX/FTSE: Not yet at B.P., Uptrend
HSI: Close to B.P., Sideways
STI: Not yet at B.P., Sideways

So, my own verdict is, not time yet to go a shoppin'.

Soros sold gold, but Paulson didn't

Soros has sold nearly all his gold. He has also massively trimmed his stakes in Bank of America Corporation, J.P. Morgan Chase & Co. and Wells Fargo & Co. He has however increased his positions in Citigroup.

John Paulson has kept his position in gold, but some rumours circulated that he might have lightened up since his 31 Mar filings. He also loaded up on HP and Transocean in the last quarter.

As I have stated in the previous article, I am still bullish on gold, but have already got rid of my position, and will not add for currency conversion reasons.

Is Gold at a bubble stage?

Whilst Jim Rogers has stated that gold is not in bubble terrtory yet, many experts have argued that interest rates are going to rise soon. As such, this may increase the opportunity costs of holding gold, resulting in it trading considerably lower. In fact, George Soros, has been selling gold and silver, after significant buying of the precious metals for the past two years. I have sold off my gold too, but to me, the recent correction in gold has not changed my opinion that gold is still on an uptrend. In fact, although I will not be buying gold anymore since the currency conversion loss makes buying it meaningless for me, I will certainly still be looking to buy gold stocks on meaningful support.

Will the bear market arrive soon?

The bear market rally is about to end, according to Michael Lombardi. Although I have no idea who he is, I am intrigued by what he said. According to him, phase one of a bear market is defined as the period from October 2007 to March 2009 (a period of 18 months), when the stock market fell 55%.

Phase two of a bear market, which is now, works to bring investors back into stocks. It is his opinion that we are presently in the "late stages of phase two" of the bear market. Phase two of a bear market can last twice as long as phase one, as it takes that long to convince investors they should get back into stocks.

Phase three, the final phase of the bear market, brings stocks back to or below the level phase one of the bear market took them down to. In this case, 6,440 for the Dow Jones Industrials. Phase three of the bear market is quick in nature. Stock prices fall rapidly. And, once they reach their low, they tend to trade in that range for months, if not years.

Should I believe this? First, I don't think this is a bear market rally. I believe we are in a bull run, although I believe the time for the bear to arrive is getting nearer, but not yet. I believe the STI would have to take out its old highs (3800)before succumbing to the bear market. As such, I will be using the coming market lull to buy. According to OCBC, stocks I should look at include CDL, China Animal, Ezion, Lian Beng, Oil and gas (SembMar and KepCorp), telecoms and Hyflux. Personally, I will look at SembMar, Zhaojin, Noble and probably Sands China.

Nibbling bit by bit?

Following the selldown last week, stock markets recovered today. Should I start buying? The stochastics are recovering from oversold on STI and HSI, but Dow Jones, DAX and FTSE are still not oversold yet. Zhaojin, my closely watched stock is oversold stochastically, but gold is not. Many stocks on my radar are bouncing off from oversold levels (NOL, SembMar, STX OSV, etc). But, the Feng Shui Index says that the Index would taper off this month, and fall into June, presenting a real buying opportunity.

So, should I succumb to the temptation to buy? Not yet, as I am getting too many conflicting signals. Wait till June.

Time to buy soon?

STI has been down by 80 points since last week. It should continue to fall further in the days and weeks ahead. To me, this is anticipated as I have already factored in a highly volatile year. But, it would present another good opportunity to accumulate stocks. What will I eye? Gold mining, oil and gas, commodities, conglomerates etc but no more weak stocks like SGX and BAC.