1Q Report Card

Due to a stronger than expected stock market in the 1st Q, I have managed to salvage my portfolio from underperformance. The breakdown:

Stock	Bought	Sold	Gain/ (Loss)
ICBC	4.22	5.47	+29%
Anhui	24.80	28.00	+13%
Sembcorp	4.85	5.11	+5%
Yanzhou	19.50	19.50	0%( but lose on commissions)
Russell	828	828	0%( but lose on commission)
Noble	1.15	-	Still holding
NOL	1.84	-	Still holding
Wilmar	5.10	-	Still holding

I continue to be of the opinion that stock markets around the world will go on to new highs (in fact Dow Jones is already on its way to breaking its 2007 high), before any major market plunge.

Hence, I will still be making use of dips in the market to add to my portfolio. Hopefully, the traditional May-Jun market lull period can provide me with attractive entry levels to purchase stocks.

Should I short the markets?

No doubt, the stock markets have been on an uptrend.

BUT, the broad market has rallied for an unbelievable 3 straight months without pause.

Although April is traditonally a good month for stocks, the months that follow, May and June are not. This is the time to consider shorting. Since it is the small caps that get sold off first, shorting the Russell 2000 is the natural choice. It is at resistance now.

Slowly placing my bets on the short side.

Update: I have decided against  shorting after noticing supports of key indices and blue chips are holding steadfastly. Will look to long instead.

I wait till money is ready to be picked up

STI 2,932.0159.79  

I am glad that I have sold just before this correction... now I wait for the correction to unfold itself. It should be a shallow one, since I do not think this rally is over yet.

I have picked up Wilmar as its share price sold down recently. I will accummulate more if necessary.

On my watchlist:
Broadway
CapMalls Asia
Capitaland
China MinZhong
Noble
STX OSV
Sands China
SembCorp
SembMar
Yangzijiang


Jim Rogers: I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up.

Outperformers will remain that - outperformers

I have closed out my positions in Sembcorp Ind and ICBC, but they have continued running up. I am once again, too early to take profit on my outperfoming stocks. Hence, it is necessary to formulate a set of rules to prevent this from happening again.

Buy Rules
#1  Buy only blue chip or very strong stocks
#2  Buy only when stock is below 200-day EMA (yes, contrary to popular trading rules!)
#3  Buy slowly, in stages

Sell Rules
#1 Sell underperformers early
#2 Sell outperformers only after selling underperformers

Harvesting profits

STI is stalling around the 3,000 level, and I thought this would be a good opportunity to take some profits off the table and wait for the inevitable correction to add positions back. However, it is not my policy to be too active in the markets. I am taking profits only because these stocks were either meant for trading, or I did not feel comfortable holding on to them anymore as I had bought them at the wrong price.

Trading Portfolio Gains:

Stock	Price Bought	Price Sold	Realised Gain (%)
ICBC	4.22	5.47	+29% over 3 mths
Anhui	24.80	28.00	+13% over 3 mths

Long Term Position I am disposing as I feel I bought at the wrong price:

Stock	Price Bought	Price Sold	Realised Gain (%)
Sembcorp	4.85 (too high)	5.11	+5% over 6 mths

The remaining stock in my trading portfolio, Yanzhou, I am waiting to sell over the next few days at breakeven.

For Noble and NOL (both long-term portfolio), I will be holding on.

On my watchlist:
Wilmar

The length of penny stock rally

According to this research on penny stock runs over the last 10 years, penny stock rallies last from 6 to 13 months.

Start	End	Duration (Months)
Sep 26 2001	Apr 24, 2001	7
May 1, 2003	Oct 22, 2003	6
Oct 21, 2005	Apr 21, 2006	6
Jun 14, 2006	Jul 17, 2007	13
Mar 17, 2009	Jan 15, 2010	10
May 26, 2010	Jan 19, 2011	8

(Source: The Edge, Feb 20 2012)

Since our current penny stock rally only began in earnest in Dec/ Jan, we can look at May/June as the dateline. Not too late to jump on the bandwagon. I am waiting eagerly for the correction.

Does this represent the future fate of stocks?

F&N is the first stock to rebound during the August selldown last year. Of late, it seemed to have lost its spirit, failing to successfully challenge its Oct 2010 high. I am of the opinion that the play on this counter is over. The other blue chip stocks in Singapore should encounter similar fates, approaching past highs, and then tapering off, soon.