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.
Thursday, August 11, 2011
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.
Subscribe to:
Posts (Atom)