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.

I have cut loss on BAC

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.

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.

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.