As has been hoped for, stocks have rebounded and quite strongly too, from the Aug 9 low. In my opinion however, the Aug 9 low is not the bottom yet. I expect the rebound to be short-lived ( a couple months), but will be using it to take profit and trim loss-making positions. I will no longer be adding positions.
After this rebound, another round of selling will come. I want to be prepared for that. Things I am considering doing include shorting indexes, buying gold and buying gold mining companies.
Wednesday, August 31, 2011
Wednesday, August 24, 2011
Doug Kass says bottom is on 9 Aug
Last year -- on July 6, 2010, Kass said the market had made its lows for the year and his call proved to be extremely accurate. And less than a week before the S&P 500hit a generational low of 676 on March 9, 2009, Kass went on CNBC and predicted the bottom. Now, Kass has predicted that the low of 2011 has been made - on 9 Aug 2011 (incidentally, Singapore's National Day). These are his reasons:
1.Such rapid and sharp declines have historically been followed by "the mean return gains of more than 10% 6 months later and greater than 20% a year later."
2. The S&P 500 is now more technically oversold than at any other time in the last 10years, with its 14-day relative strength index at 16.5 percent. A level below 20 generally attracts buyers.
3. He thinks the historic implication of the S&P downgrade will ultimately be a kind of wake-up call for lawmakers.
4. The ratio between normalized earnings and corporate bond yields has never been more stretched, like in 2009.
5. The economy is still growing, albeit very slowly.
Doug Kass, however, has not always made correct calls. In Aug 2009 for example, he made the wrong call that stock markets would fall again. Instead, they continued to rally. So, it is caveat emptor I guess. But I am hoping for at least one more rally in the near future, and signs are that the 9 Aug low has stayed for most stocks for now.
1.Such rapid and sharp declines have historically been followed by "the mean return gains of more than 10% 6 months later and greater than 20% a year later."
2. The S&P 500 is now more technically oversold than at any other time in the last 10years, with its 14-day relative strength index at 16.5 percent. A level below 20 generally attracts buyers.
3. He thinks the historic implication of the S&P downgrade will ultimately be a kind of wake-up call for lawmakers.
4. The ratio between normalized earnings and corporate bond yields has never been more stretched, like in 2009.
5. The economy is still growing, albeit very slowly.
Doug Kass, however, has not always made correct calls. In Aug 2009 for example, he made the wrong call that stock markets would fall again. Instead, they continued to rally. So, it is caveat emptor I guess. But I am hoping for at least one more rally in the near future, and signs are that the 9 Aug low has stayed for most stocks for now.
Monday, August 22, 2011
Brokerages have started downgrading shares, is a bottom near?
At least 1 brokerage have started downgrading shares in Singapore. These are the "new" target prices - 1)Yangzijiang:1.10 2)Sembcorp Marine:3+
3)Sembcorp Ind:2.90. Should I bail? No, when analysts say sell, it is time to buy.
3)Sembcorp Ind:2.90. Should I bail? No, when analysts say sell, it is time to buy.
Saturday, August 20, 2011
Mistakes I have been making
I have made mistakes prior to this stock market crash. Otherwise, I would have taken more profit from the table, and thus have more to invest with now.
Mistakes I make include:
1. Investing in shares which are on the verge of overbought. (CNOOC @19.05, Sembcorp @5.09)
2. Needless cutting loss on shares. (Zhaojin)
3. Continuing to invest in counters which are loss making. (NOL)
There is therefore a need to:
1. Resist buying shares when they have moved out of oversold territory.
2. Refrain from cutting loss.
3. Need to do more due diligence in stock selection.
Mistakes I make include:
1. Investing in shares which are on the verge of overbought. (CNOOC @19.05, Sembcorp @5.09)
2. Needless cutting loss on shares. (Zhaojin)
3. Continuing to invest in counters which are loss making. (NOL)
There is therefore a need to:
1. Resist buying shares when they have moved out of oversold territory.
2. Refrain from cutting loss.
3. Need to do more due diligence in stock selection.
Friday, August 19, 2011
Tan Teng Boo now predicts stocks will fall 20%
Remember Tan Teng Boo? He confidently called for people to buy stocks way back during the market slump in 2008. Of course, he was right. Now, he is a bear. He is expecting more severe downside for global stocks in the coming few quarters. He says a severe downturn or recession in the US is on the cards. Also, Europe's debt crisis could get messier and inflationary pressure in emerging markets is unlikely to ease anytime soon.
As such, he expects the S&P to trade to a low of 900 over the next 12 to 15 months. He sees Hang Seng and Nikkei to trade to 15,000 and 8,000 respectively too. What will he buy when markets have fallen to those levels? He is eyeing London listed IP Group, DNA-sequencing company Illumina and Hong Kong listed REXlot.
I remember clearly Tan Teng Boo calling for a buy during those days. It pays to heed his advice now. I am keeping my powder dry. The next 12 to 15 months could be the most defining moment of my life.
As such, he expects the S&P to trade to a low of 900 over the next 12 to 15 months. He sees Hang Seng and Nikkei to trade to 15,000 and 8,000 respectively too. What will he buy when markets have fallen to those levels? He is eyeing London listed IP Group, DNA-sequencing company Illumina and Hong Kong listed REXlot.
I remember clearly Tan Teng Boo calling for a buy during those days. It pays to heed his advice now. I am keeping my powder dry. The next 12 to 15 months could be the most defining moment of my life.
NOL is the first blue chip in Singapore to fall to crisis low
NOL has become the first blue chip to fall to its crisis low of $1.02. It is interesting to see if others will follow soon. I am expecting to be so. Unfortunately, I have holdings in NOL at much higher prices, but will I be following the mad stampede out now? No way, but instead I am monitoring, and looking to average in. Preparing my bullets for the next Great Stock Sale.
Thursday, August 18, 2011
Is QE3 coming?
BEIJING (MarketWatch) -- The world is likely to see a third round of quantitative easing in the U.S. soon, but the possibility of the U.S economy suffering a double dip isn't big, People's Bank of China adviser Li Daokui said Tuesday (9 Aug 2011).
Current market volatilities are purely caused by "blind actions" of U.S politicians, which lead to excess short-term fiscal austerity in the U.S., Li said on his personal microblog.
"The QE3 is to be launched soon, which is actually a second bailout, and the financial market will rise quickly," he said, adding that high-quality assets and currencies will benefit from such easing, though long-term Treasurys will fall.
"A double dip in the U.S economy is not likely, as asset prices will recover fast," he said.
Current market volatilities are purely caused by "blind actions" of U.S politicians, which lead to excess short-term fiscal austerity in the U.S., Li said on his personal microblog.
"The QE3 is to be launched soon, which is actually a second bailout, and the financial market will rise quickly," he said, adding that high-quality assets and currencies will benefit from such easing, though long-term Treasurys will fall.
"A double dip in the U.S economy is not likely, as asset prices will recover fast," he said.
Tuesday, August 16, 2011
Prices to look out for once bear market sets in
I am a short-term bull, but a long-term bear on the stock market now. Although I am still invested, I do not intend to hold out for very long. I will then wait for a better time to reenter the market. What prices can I expect? If I believe US will run into double dip recession, therefore a revisit to 2008 levels, then:
CapitaLand : 1.70
City Developments : 3.87
ComfortDelGro Corp : 0.97
DBS Group Holdings : 5.02
Fraser and Neave : 1.625
Genting S'pore : 0.40
Golden Agri-Resources : 0.149
Hongkong Land Holdings : 1.70
Jardine Cycle & Carriage : 6.44
Keppel Corp : 2.69
Neptune Orient Lines : 1.02
Noble Group : 0.30
Oversea-Chinese Banking Corp: 3.51
Olam International : 0.91
SembCorp Industries : 1.27
SembCorp Marine : 0.79
SIA Engrg Co : 1.23
S'pore Press Holdings :1.93
S'pore Technologies Engrg : 1.62
S'pore Telecommunications : 1.755
S'pore Airlines : 7.21
S'pore Exchange : 3.69
StarHub : 1.76
United Overseas Bank : 7.37
Wilmar International : 1.76
While I certainly do not expect to see these prices soon, but nothing is for sure(esp. if we are truly entering the third phase of the bear market) it pays to be prepared, and to grab shares with both hands if prices fall again to such levels.
CapitaLand : 1.70
City Developments : 3.87
ComfortDelGro Corp : 0.97
DBS Group Holdings : 5.02
Fraser and Neave : 1.625
Genting S'pore : 0.40
Golden Agri-Resources : 0.149
Hongkong Land Holdings : 1.70
Jardine Cycle & Carriage : 6.44
Keppel Corp : 2.69
Neptune Orient Lines : 1.02
Noble Group : 0.30
Oversea-Chinese Banking Corp: 3.51
Olam International : 0.91
SembCorp Industries : 1.27
SembCorp Marine : 0.79
SIA Engrg Co : 1.23
S'pore Press Holdings :1.93
S'pore Technologies Engrg : 1.62
S'pore Telecommunications : 1.755
S'pore Airlines : 7.21
S'pore Exchange : 3.69
StarHub : 1.76
United Overseas Bank : 7.37
Wilmar International : 1.76
While I certainly do not expect to see these prices soon, but nothing is for sure(esp. if we are truly entering the third phase of the bear market) it pays to be prepared, and to grab shares with both hands if prices fall again to such levels.
Saturday, August 13, 2011
One more rally, then crash?
Increasingly, the general opinion among analysts is that the bull market has come to an end. It is in the charts.
"We believe we are seeing pretty clear signs that the 2009 to 2011 bull market is over and that the bear is just starting to get its claws into the market," writes Mark Arbeter, chief technical strategist at Standard & Poor's, in commentary on Friday. "While we do think a bear market has started, we think we may see one more counter-trend rally, which could be very strong. Once this forecasted rally ends, we think the next leg of the bear market will show its teeth."
Expressing the same view, Jim Rogers commented "I'm expecting a rally when the air clears but I don't think it will last that long. There will be more problems, especially from European and US markets... Still, I happen to think this panic is overdone... people are throwing investments out the window and that's not how stocks, bonds or commodities work. Even if the world is coming to an end, it's not going to happen in a week. Normally, when you have panic in the markets, people don't tend to buy, even when it is usually the best thing to do. It's very hard to get over that psychological barrier but it usually pays off after a while.
Lessons to be drawn: Wait very patiently for the rally, which may take some time to develop, then wait further for peak rally prices, and SELL all my shares, allocate some funds for shorting, and more funds for LONGING at bargain prices when the bear is out in full force. Remember, GET OUT from all stocks once the counter-trend rally arrives and don't overstay the rally.
"We believe we are seeing pretty clear signs that the 2009 to 2011 bull market is over and that the bear is just starting to get its claws into the market," writes Mark Arbeter, chief technical strategist at Standard & Poor's, in commentary on Friday. "While we do think a bear market has started, we think we may see one more counter-trend rally, which could be very strong. Once this forecasted rally ends, we think the next leg of the bear market will show its teeth."
Expressing the same view, Jim Rogers commented "I'm expecting a rally when the air clears but I don't think it will last that long. There will be more problems, especially from European and US markets... Still, I happen to think this panic is overdone... people are throwing investments out the window and that's not how stocks, bonds or commodities work. Even if the world is coming to an end, it's not going to happen in a week. Normally, when you have panic in the markets, people don't tend to buy, even when it is usually the best thing to do. It's very hard to get over that psychological barrier but it usually pays off after a while.
Lessons to be drawn: Wait very patiently for the rally, which may take some time to develop, then wait further for peak rally prices, and SELL all my shares, allocate some funds for shorting, and more funds for LONGING at bargain prices when the bear is out in full force. Remember, GET OUT from all stocks once the counter-trend rally arrives and don't overstay the rally.
Thursday, August 11, 2011
Investing rules
I remember Richard Band. In 2009, I remember reading that he has been asking people to buy shares when there is blood in stock markets, very much like now. However, I did not heed his advice then.
This is what he is advising now, amidst the current market turmoil: You should be buying stocks, not selling them. This is not 2008 all over again. It’s not even 1987
Quoting from J. Paul Getty, a billionaire who truly understood the fundamentals of successful investing, said: "Owners of sound securities should never panic.", Richard Band qualifies that opportunities like my biggest, safest win ever appear most often at moments of panic in the market. And you could certainly call the last 10 days a panic—gold hit new record highs and great businesses like Apple and Berkshire Hathaway took a big haircut on news that the world’s major economies have major problems. But if you can ignore the fear merchants and the “end is coming” crowd, big profits are yours for the taking, because this blind panic sell-off is an opportunity to make some serious money. Perhaps the best chance you’ll have for the next 5 years."
He narrows down successful investing to these simple rules:
Don’t Follow the Crowd
Buy Into Extreme Panic
Be Patient
Buy Quality
Average Down if Necessary
Great advice, and great rules.
This is what he is advising now, amidst the current market turmoil: You should be buying stocks, not selling them. This is not 2008 all over again. It’s not even 1987
Quoting from J. Paul Getty, a billionaire who truly understood the fundamentals of successful investing, said: "Owners of sound securities should never panic.", Richard Band qualifies that opportunities like my biggest, safest win ever appear most often at moments of panic in the market. And you could certainly call the last 10 days a panic—gold hit new record highs and great businesses like Apple and Berkshire Hathaway took a big haircut on news that the world’s major economies have major problems. But if you can ignore the fear merchants and the “end is coming” crowd, big profits are yours for the taking, because this blind panic sell-off is an opportunity to make some serious money. Perhaps the best chance you’ll have for the next 5 years."
He narrows down successful investing to these simple rules:
Don’t Follow the Crowd
Buy Into Extreme Panic
Be Patient
Buy Quality
Average Down if Necessary
Great advice, and great rules.
Wednesday, August 10, 2011
Insiders are buying!
There is one group that appears to be buying when many others are selling during this current market turmoil. And they have a history of being more right than wrong about the market's direction.
We are referring to corporate insiders, a group that includes corporate officers, directors, and largest shareholders. You may recall that, three weeks ago, corporate insiders were selling at an abnormally high pace.
The sell-to-buy ratio for insiders now stands at 1.68-to-1. That's bullish, according to Vickers, since the long-term average level for this ratio is between 2 and 2.5 to 1.
To further put the current level of this ratio into context, consider that in the week ending July 22, this ratio stood at 6.43-to-1.
However, the insiders may not always be right. And even when they are, the market doesn't always respond as immediately as it did. Still, it is comforting that a group of investors who presumably know more about their companiess' prospects than the rest of us consider the low prices of their stocks to represent attractive bargains.
Source: Mark Hulbert, MarketWatch
We are referring to corporate insiders, a group that includes corporate officers, directors, and largest shareholders. You may recall that, three weeks ago, corporate insiders were selling at an abnormally high pace.
The sell-to-buy ratio for insiders now stands at 1.68-to-1. That's bullish, according to Vickers, since the long-term average level for this ratio is between 2 and 2.5 to 1.
To further put the current level of this ratio into context, consider that in the week ending July 22, this ratio stood at 6.43-to-1.
However, the insiders may not always be right. And even when they are, the market doesn't always respond as immediately as it did. Still, it is comforting that a group of investors who presumably know more about their companiess' prospects than the rest of us consider the low prices of their stocks to represent attractive bargains.
Source: Mark Hulbert, MarketWatch
Buffett Says Stay Calm, Stay the Course
In the best testament to not overreact to the market panic to US credit rating downgrade, we look to respected investment guru Warren Buffett. He said that not only is America’s debt still sound, it’s probably even stronger than ever. “In fact, if there were a quadruple-A rating, I’d give the U.S. that,” Buffett said.
As if to prove his point, Berkshire’s National Indemnity Co. threw out a $52-per-share cash offer for Transatlantic Holdings, Inc. (NYSE:TRH) to total $3.25 billion over the weekend. This big move to buy even as the market is souring says a lot.
Remember Buffett in 2008, when it seemed crazy to jump into banks headfirst when the market was going haywire in 2008. But it was awfully profitable for Buffett, who dumped $5 billion into preferred stock of Goldman Sachs. As a result, Berkshire Hathaway earned a cool $500 million per year in dividends before Goldman bought back the stock several months ago, and enjoyed a 10% premium to buy back those preferred shares.
Therefore, stay calm, and stay the course during the market panic.
I am now vested in:
S'pore Blue Chips: NOL, SembCorp Ind and F&N. These are a mixture of medium and long term plays on the rebound of worldwide and S'pore stock makets.
HK Oil and Gas play: CNOOC: This is a direct play on oil prices rebounding.
Nikkei Index: I foresee it going to 10,000 again soon. Will be accumulating more if market moves down further.
As if to prove his point, Berkshire’s National Indemnity Co. threw out a $52-per-share cash offer for Transatlantic Holdings, Inc. (NYSE:TRH) to total $3.25 billion over the weekend. This big move to buy even as the market is souring says a lot.
Remember Buffett in 2008, when it seemed crazy to jump into banks headfirst when the market was going haywire in 2008. But it was awfully profitable for Buffett, who dumped $5 billion into preferred stock of Goldman Sachs. As a result, Berkshire Hathaway earned a cool $500 million per year in dividends before Goldman bought back the stock several months ago, and enjoyed a 10% premium to buy back those preferred shares.
Therefore, stay calm, and stay the course during the market panic.
I am now vested in:
S'pore Blue Chips: NOL, SembCorp Ind and F&N. These are a mixture of medium and long term plays on the rebound of worldwide and S'pore stock makets.
HK Oil and Gas play: CNOOC: This is a direct play on oil prices rebounding.
Nikkei Index: I foresee it going to 10,000 again soon. Will be accumulating more if market moves down further.
Tuesday, August 9, 2011
Comments from veterans Marc Faber and Jim Rogers on the state of the stock markets
These two veterans have been right in the past on the turning points of the market, so it may be good to get their opinions now on the stock market.
Marc Faber on 8 Aug
I don`t think we will make new highs this year. I think the market basically is incredibly oversold at this level and its quite likely that we may bottom out today or tomorrow and have a rally
Jim Rogers on 8 Aug
Western Governments Will Embark On A New Round Of Quantitative Easing To Help Spur Their Moribund Economies
Marc Faber on 8 Aug
I don`t think we will make new highs this year. I think the market basically is incredibly oversold at this level and its quite likely that we may bottom out today or tomorrow and have a rally
Jim Rogers on 8 Aug
Western Governments Will Embark On A New Round Of Quantitative Easing To Help Spur Their Moribund Economies
Market is falling like crazy, and I am buying shares
Yes, I am buying shares at this moment, as the Hang Seng just drops another 1000 points. You can call me crazy, but here's why:
1. Blood in the streets as captured by newspaper headlines. Traditionally, they have been the clearest indication of the best time to buy shares, when newspaper headline scream "S'pore among worst hit as markets dive again".
2. Earnings in corporate America remain strong.
3. The government got what Wall Street wanted: a big increase in its spending limit.
4. The Federal Reserve, according to Michael Lombardi, is getting ready to come out with some new form of QE3.
5. I don't forsee the US going into double dip recession.
It is therefore my belief that although the stock market is likely to be choppy and reactionary over the very near term, this is part of a bottoming process, setting the stage for a new stock market rally.
1. Blood in the streets as captured by newspaper headlines. Traditionally, they have been the clearest indication of the best time to buy shares, when newspaper headline scream "S'pore among worst hit as markets dive again".
2. Earnings in corporate America remain strong.
3. The government got what Wall Street wanted: a big increase in its spending limit.
4. The Federal Reserve, according to Michael Lombardi, is getting ready to come out with some new form of QE3.
5. I don't forsee the US going into double dip recession.
It is therefore my belief that although the stock market is likely to be choppy and reactionary over the very near term, this is part of a bottoming process, setting the stage for a new stock market rally.
Saturday, August 6, 2011
Why I am excited when newspaper headline today reads "Bloodbath across global market"
I am excited at reading on the front page of the Straits Times the above headline. Yes, I should be panicking, but no I am not. Whenever a healine screams like this, it is time to go bargain hunting. Think Aug 2007. Think Sep 2008. Think March 2009. Now, this could yet present the best opportunity of 2011, which has been a rather tepid year.
But is it now the time to buy? Checking on the STI chart, it seems it has more to go before picking up bargains. Let's go back in history.
2007: Market peaked around 20 Jul and intermediate bottomed around 17 Aug.
2007: Market peaked around Oct and bottomed around March.
2008: Market peaked around May and bottomed Oct.
2009: Market bottomed and is peaking around Apr 2011.
This bull run from March 2009, I believe is tiring, but it resembles that of July or Oct 2007. Which means there should be 1 more round, and then the official arrival of the bear market.
But buy now? Not yet, as chart patterns indicate more to fall.
But is it now the time to buy? Checking on the STI chart, it seems it has more to go before picking up bargains. Let's go back in history.
2007: Market peaked around 20 Jul and intermediate bottomed around 17 Aug.
2007: Market peaked around Oct and bottomed around March.
2008: Market peaked around May and bottomed Oct.
2009: Market bottomed and is peaking around Apr 2011.
This bull run from March 2009, I believe is tiring, but it resembles that of July or Oct 2007. Which means there should be 1 more round, and then the official arrival of the bear market.
But buy now? Not yet, as chart patterns indicate more to fall.
Wednesday, August 3, 2011
Prof Chan is bullish on the stock markets
Famed stock punter Prof Y C Chan had this to say about the current market turmoil:
1. US credit ratings downgrade
People holding such a view do not understand how US gets its AAA rating.
Debt obligation rating has nothing to do with the amount of outstanding debts, but its ability to meet its obligations when due. Unless partisan poliical infighting prevents US from rolling over its debts and printing currency notes, debt default is unlikely as all debt obligations are denominated in US$. US government can print any amount of currency notes to repay its obligations at any one time.
2. Will there be QE3?
There is no direct relationship between QE3 and the upper limit of
debt obligations; US is still the strongest world power, people are willing to accept itsdebt instruments for acceptable rate of returns. Past QE2 was to lower the interest rate of national debts, and to enable the market remain at low interest level, which had no direct relationship with debt obligations. Large quantum of debt instruments may indirectly lead to rising interest rate; Fed may have to use QE3 to surpress the interest rate, but no indication of such a move for the time being.
3. What happens from here?
Now US debt default risk is on hold. Europe’s debt defauft risk remains, but
the issue has been played up so many times its impact has been diminishing. From
now the market should focus on corporate results.
4. Advice for investors?
My advice is not to panic, as bad news dissappear, I expect the STI to break the high level early in the year to attain new high
Bold remarks in these times indeed. But I am listening, and am preparing to scoop up bargains as markets fall further.
1. US credit ratings downgrade
People holding such a view do not understand how US gets its AAA rating.
Debt obligation rating has nothing to do with the amount of outstanding debts, but its ability to meet its obligations when due. Unless partisan poliical infighting prevents US from rolling over its debts and printing currency notes, debt default is unlikely as all debt obligations are denominated in US$. US government can print any amount of currency notes to repay its obligations at any one time.
2. Will there be QE3?
There is no direct relationship between QE3 and the upper limit of
debt obligations; US is still the strongest world power, people are willing to accept itsdebt instruments for acceptable rate of returns. Past QE2 was to lower the interest rate of national debts, and to enable the market remain at low interest level, which had no direct relationship with debt obligations. Large quantum of debt instruments may indirectly lead to rising interest rate; Fed may have to use QE3 to surpress the interest rate, but no indication of such a move for the time being.
3. What happens from here?
Now US debt default risk is on hold. Europe’s debt defauft risk remains, but
the issue has been played up so many times its impact has been diminishing. From
now the market should focus on corporate results.
4. Advice for investors?
My advice is not to panic, as bad news dissappear, I expect the STI to break the high level early in the year to attain new high
Bold remarks in these times indeed. But I am listening, and am preparing to scoop up bargains as markets fall further.
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