The Edge's Top 10 picks

The Edge has published its Top 10 picks for 2012. Although not always accurate, they are widely
followed in the local investing community.

Company	PER	Div. Yield(%)	NAV ($)
Bt Sembawang	4.8	1	3.98
CMA	13	1.2	1.52
FJ Benjamin	12.6	6.7	0.23
Genting HK	22.4	0	US0.27
Noble	12.9	2.3	0.88
OKP	7.2	1.8	0.24
Pan United	8.4	6.5	0.52
Semb Marine	13.4	2.2	1.05
ST Engineering	16.7	2.5	0.5
UOB	11.2	3.5	12.89

If stock markets continue its move upwards, I will forget about this list. But if stock markets
correct, I may pick some counters from this list to add to my existing portfolio. Noble and SembCorp Ind (parent of SembMar) are already in my portfolio.

STI has broken out... more upside ahead

As expected, STI has broken out to the upside...

This should at least lead to a mini bull market... before another financial calamity grips the market.

What a way to usher in the YEAR OF THE DRAGON!

Will STI turn bull? I'm betting it would...

What a fantastic performance by the STI in the weeks leading to the Lunar New Year. Look at the chart below:

The STI is challenging its 200-EMA. If it successfully crosses, it will be very bullish for Singapore stocks in the days and weeks ahead. What about other indices? As has been mentioned in my 9 Jan post, the Dow, DAX and FTSE have already broken on the upside of the 200-EMA. Hang Seng is similar to STI, just about attempting to break past. The Shanghai Index, meanwhile, is the laggard, but I do expect better performances from it in the weeks ahead.

What does this imply? From a trader's point of view, definitely to be a buyer. Even if we are no longer buying, then at least do not sell shares yet, because better days are just right ahead.

So, from the technicals, things are improving . What about the fundamental perspective? Jonathan Wilmot, chief global strategist at Credit Suisse provides these reasons:

1. Global industrial production is now significantly lower than global demand. In 2009, production surged shortly after economic growth rebounded.
2. There is a significant divergence between the level of US corporate profits and trend real equity returns.
3. Equities are cheap.

Hence, knowing that the bull is coming, I will be setting my selling price targets. In the meantime, be patient and just wait. 

Think shares are going to be cheaper? Think again...

Many analysts are predicting that in 2012, things will get worse before getting better. Hence, to hold off buying stocks for now. I really think it is not the best piece of advice. A close look at the markets now reveal a very different picture of things. Many stocks are emerging from the  deep slumber that they were in since middle of last year (Remember bear markets can be short!). In fact, some stocks have gone as far as break their 200-day EMA, what I view as a start of a new bull market. (Remember I wrote last week on the high probability that this bear market could be ending soon. I am so glad I did not sell during the bear, but have instead been buying). KepCorp, SembMar, SembCorp Ind, GLP, F&N... are some of the local blue chips that have broken above their 200-day EMA. There could be very bullish times ahead. Indeed, the old adage "To buy when others are fearful" is true. Many people are putting off buying stocks, yet stocks are creeping up.

At this juncture, I only manage to find one voice who shares exactly my sentiments (which is not really a bad thing since it wll not be bullish if too many people are touting buying stocks). According to Michael Gordon, chief investment officer of equities at BNP Paribas Investment Partners, stocks will do very well in the next 3-6 months, and even post double digit growth for the year. Extremely cheap valuations, positive US data coupled with people getting bored with problems in Europe will be the key drivers for stocks to go higher. The good showing of equities in the first weeks of the year already indicate that risk aversion to equities is fading. The next trend will be a short-term rebound in global equities, where emerging market equities will outperform their developed market peers. For a more sustainable bull market, Gordon is looking at price action of gold. If equities rise 10% to 15%, but gold doesn't, then it is a clear sign of more good thing to come for equities. Gordon also warns against investing in defensive stocks as they could underperform this year.

I am happy that finally, my portfolio is seeing some improvement. But on the other hand, a little regretful that I have not bought enough for this bull market. Nonetheless, should this still unconvincing bull market stall, I will be buying again. Meanwhile, enjoy the ride up (hopefully). My personal opinion is that it should last a few months at least. 

How long more will this bear market go?

Shanghai Index has been in bear territory (never recover above 200 day EMA) since May 2011, Hong Kong since June, Singapore since August.

Notwithstanding, Dow Jones and FTSE have recovered above their 200 day EMA. DAX is on the verge...

I think it is a matter of time before the Asian markets follow. This bear market won't be too long. 

Ouch... my portfolio is hurting

My portfolio, going into 2012, is hurting. This is in contrast to last year, where I went into 2011 on a high.

Trading
ICBC	+9%
Anhui	-7%
Yanzhou	-15%
Investing
NOL	-37.5%
Noble	-1%
Sembcorp Ind	-15%

Ok, let's be honest, I am actually a little panicky. But, will I be cutting losses? No, I am in for the long haul.
In fact, I will be adding more to my portfolio once the crisis becomes full blown. There is no better time to start a portfolio than the next few months, because we will be getting value for a song, once the inevitable stock market rout/s arrive.

My main aims in 2012 are two-pronged. The first is to build up a portfolio of stocks(remember asset allocation is the ideal way to build wealth) , returning me approximately 10% p.a. This porfolio is long term in nature. The second will be to maintain a trading account. This account is shorter term in nature. My aim is to make money in as quick time as possible through timing the markets. Although the disadvantages of timing the markets are well-known, successful stories of traders keep me firmly rooted in the belief that success in trading is possible.

For starting a portfolio of stocks, the following must be considered:

Stock Types	Expected Return	Allocation
Growth	20%	20%
Value	10%	20%
REITs	6%	40%
Cash	0.5%	20%

I am also thinking of bonds, index funds and ETF to add to the portfolio. I will update my knowledge of these products before adding them to my portfolio.

As of now, my portfolio only has growth stocks (not very healthty)!