Last day of 2009, a pretty much volatile year for stocks worldwide. Singapore, which suffered or should I say, experienced relatively less volatility than other countries around the world, is gearing up for a more predictable 2010. Personally I would stay out of the US market, though news about recovery constantly return, there is still talk hovering around that fundamentals are not strong enough yet.
The STI seems all set to hit 2900 in the first week of 2010. It seems to be the trend nowadays that no bad news is good news, and if it continues that way, 2010 would offer some steady growth for stocks that have some decent fundamentals and upcoming projects, yet dragged down by negative sentiment this while.
The 3 Singapore banks will continue its uptrend in price, at least in the first month or so and other stocks that are worth having a second look at include Ho Bee, Hyflux, Keppel land and Sembcorp Marine.
Thursday, December 31, 2009
Tuesday, December 29, 2009
The Case for Genting Singapore
One of the major contributors to STI movement this couple of days had been due to a highly traded Genting Singapore. The stock closed at $1.17 last Friday and ran up to $1.24 at the start of this week, and prices show no sign of abating.
The Business Times today talked about Genting and once again, a not too surprising 'Buy' call was issued with target price of $1.30. If I recall, this had been the target price for a couple of broker houses for the past month or so.
This is hardly unexpected, given all the hype surrounding the opening of Genting's RWS during first quarter of next year, probably just in time for the influx of CNY punters. The delay in the opening of Marina Bay Sands by LVS supposedly caused by bad weather and bankruptcy of some of its construction firms probably also contributed to the optimistic outlook for Genting.
Too much hype I must say. Prices are likely to hit $1.30 into the first week of January, but any growth will be muted as short term investors would probably start to cash out. Prices would probably continue moving upward, but much slower than what's happening now. Hence I would probably hold back my horses rather than going in at $1.24.
Oceanus, on the other hand, would be a potential counter coming into 2010. Would look more into this tomorrow.
The Business Times today talked about Genting and once again, a not too surprising 'Buy' call was issued with target price of $1.30. If I recall, this had been the target price for a couple of broker houses for the past month or so.
This is hardly unexpected, given all the hype surrounding the opening of Genting's RWS during first quarter of next year, probably just in time for the influx of CNY punters. The delay in the opening of Marina Bay Sands by LVS supposedly caused by bad weather and bankruptcy of some of its construction firms probably also contributed to the optimistic outlook for Genting.
Too much hype I must say. Prices are likely to hit $1.30 into the first week of January, but any growth will be muted as short term investors would probably start to cash out. Prices would probably continue moving upward, but much slower than what's happening now. Hence I would probably hold back my horses rather than going in at $1.24.
Oceanus, on the other hand, would be a potential counter coming into 2010. Would look more into this tomorrow.
Wednesday, December 23, 2009
2900?
Managed to sell off some counters that I deemed moving sideways over the past couple of days. The market is certainly picking up this week, with movements from the 3 banks and Jardine group of companies.
Keppel Corp and Keppel Land seem to be rather bullish recently, and I expect the trend to sustain through till next week. Keppel's Brazil subsidiary had recently acquired a $800m contract from Noble, and their contract book seems optimistic enough to convince me to hold their stock at least into first quarter 2010.
Hyflux has called on a trading halt on news about the collaboration with JGC corp Japan for developing water projects in the PRC. Agreement is through and prices have gone up to a new level apparently, hitting $3.70 on the 14th. This is one counter that am seriously contemplating putting more funds into.
STI looks optimistic, possibly could hit 2900 coming into the new year.
Keppel Corp and Keppel Land seem to be rather bullish recently, and I expect the trend to sustain through till next week. Keppel's Brazil subsidiary had recently acquired a $800m contract from Noble, and their contract book seems optimistic enough to convince me to hold their stock at least into first quarter 2010.
Hyflux has called on a trading halt on news about the collaboration with JGC corp Japan for developing water projects in the PRC. Agreement is through and prices have gone up to a new level apparently, hitting $3.70 on the 14th. This is one counter that am seriously contemplating putting more funds into.
STI looks optimistic, possibly could hit 2900 coming into the new year.
Friday, December 18, 2009
Back in business
The exams are finally over and after a short hiatus, I figure it's probably best to put myself actively in the investing scene again. The overall feeling of uncertainty in the NYSE and NASDAQ has kept me out of the US market at the moment, as fundamentals are STILL not strong for a steady recovery.
Interest rates in the US have been kept low since a year ago to ease financial borrowing on the back of the US financial system collapse. However, interest rates NOW are still near zero, and borrowing is made easier than before, not a good thing since the meltdown was due to living on credit. Economics teaches us that low rates of interest facilitates borrowing and investment, and short term growth. But is this method a sustainable long term solution for recovery?
Time to streamline the SG portfolio. Forsee a busy term next semester, probably have to pick a few stocks to concentrate on. Present attention is given to Hyflux and SembMarine.
Interest rates in the US have been kept low since a year ago to ease financial borrowing on the back of the US financial system collapse. However, interest rates NOW are still near zero, and borrowing is made easier than before, not a good thing since the meltdown was due to living on credit. Economics teaches us that low rates of interest facilitates borrowing and investment, and short term growth. But is this method a sustainable long term solution for recovery?
Time to streamline the SG portfolio. Forsee a busy term next semester, probably have to pick a few stocks to concentrate on. Present attention is given to Hyflux and SembMarine.
Friday, November 6, 2009
finally some time to reflect..
Haven't blogged in ages as I've been kept busy with school work. The STI as of now is 2661 points, and it has been hovering between 2600 and 2700 for the past few weeks. Reason being the uncertainty hovering around global markets, especially the financial market of US.
The fluctuations might be a good thing though, as one can buy into the dips and sell as the prices go upwards. It is of course difficult to tell when, but the road to recovery, no doubt slow, will be an unpredictable one with several dips along the way.
Several counters to look into this period are the REITs..At this point of speaking, Ascendas REIT seems like a good counter to look into given the trend.
The market might continue to fall further next week if the trends of the STI ETF prevail. Might hit the early 2600s again for the upcoming week.
The fluctuations might be a good thing though, as one can buy into the dips and sell as the prices go upwards. It is of course difficult to tell when, but the road to recovery, no doubt slow, will be an unpredictable one with several dips along the way.
Several counters to look into this period are the REITs..At this point of speaking, Ascendas REIT seems like a good counter to look into given the trend.
The market might continue to fall further next week if the trends of the STI ETF prevail. Might hit the early 2600s again for the upcoming week.
Monday, September 21, 2009
an opportunity?
When the government announced its new property policies to curb speculation of new housing units, half a dozen stock prices for property based stocks such as Allgreen, City Developments and Keppel Land fell overnight.
Took the chance that morning to purchase some lots of Keppel Land and Ho Bee, as the fundamentals of these companies should not be affected by the breaking news. I believe that you can never go too wrong with property in Singapore. Buying a property is more of location than timing, and the companies whose prices had fell this time round weren't only in residential investments.
Upcoming week would be interesting to see if the prices start to show any movement upwards or if investors are still half hearted over the prospect of the property market in Singapore. A perfect example to show how stock prices are so closely related to sentiment.
News. Panic. Sell.
Took the chance that morning to purchase some lots of Keppel Land and Ho Bee, as the fundamentals of these companies should not be affected by the breaking news. I believe that you can never go too wrong with property in Singapore. Buying a property is more of location than timing, and the companies whose prices had fell this time round weren't only in residential investments.
Upcoming week would be interesting to see if the prices start to show any movement upwards or if investors are still half hearted over the prospect of the property market in Singapore. A perfect example to show how stock prices are so closely related to sentiment.
News. Panic. Sell.
Monday, September 14, 2009
Genting Sg more hype than substance?
Read in the Business Times today about Genting Singapore. Being compared to the tech bubble that started to grow at the start of the internet age, certain analysts have issued 'Buy' signals on Genting, betting on the potential of earnings when the IR begins its operations.
However, fundamentals have been ignored for this loss making company. The optimistic glow shining upon Genting SP has sent the share prices up on a spectacular rise for the past 2 weeks, from about a dollar to $1.21. Prices have fell back to less hyped levels at about $1.06 today.
I would expect the price to drop further, perhaps back to $1. Other stocks have shown great volatility as well. Allgreen properties hit a high of $1.30 in the past week but fell back to my buying price of $1.16.
Would look at the possibility of purchasing some counters tomorrow to make up for those I had sold at the start of September. Hopefully, there would be some dips I can buy in.
However, fundamentals have been ignored for this loss making company. The optimistic glow shining upon Genting SP has sent the share prices up on a spectacular rise for the past 2 weeks, from about a dollar to $1.21. Prices have fell back to less hyped levels at about $1.06 today.
I would expect the price to drop further, perhaps back to $1. Other stocks have shown great volatility as well. Allgreen properties hit a high of $1.30 in the past week but fell back to my buying price of $1.16.
Would look at the possibility of purchasing some counters tomorrow to make up for those I had sold at the start of September. Hopefully, there would be some dips I can buy in.
Saturday, September 5, 2009
just a short note
Do you believe in the September effect?
It is said that bad things in the market take place in the month of September, like the Great Depression in 1930. Will it be a double dip recession this month? Indeed trading volumes have been generally low in SGX and the STI seems to have hit some sort of ceiling slowing down the rebound after the dip.
Having temporarily quit the night trading US market because I couldn't afford the energy and stress amid my studies, I had shifted my focus to the local market. The recent rally in the US market had also died down and the momentum has also influenced the STI.
Have been looking into potential buys now that prices are depressed. My guess is momentum would probably pick up again after next week, though much of the movement will be attributed as usual, to what happens in the US market and more importantly, Hong Kong.
It is said that bad things in the market take place in the month of September, like the Great Depression in 1930. Will it be a double dip recession this month? Indeed trading volumes have been generally low in SGX and the STI seems to have hit some sort of ceiling slowing down the rebound after the dip.
Having temporarily quit the night trading US market because I couldn't afford the energy and stress amid my studies, I had shifted my focus to the local market. The recent rally in the US market had also died down and the momentum has also influenced the STI.
Have been looking into potential buys now that prices are depressed. My guess is momentum would probably pick up again after next week, though much of the movement will be attributed as usual, to what happens in the US market and more importantly, Hong Kong.
Sunday, August 23, 2009
getting busy...
Due to my busy workload and upcoming performances, I would be updating less but this does not mean I'm taking my sight off the stock market.
The next week would be a good week to start shopping around for more counters to hold for the mid to long term. Will be off short term trading for a while, as it would require constant monitoring in the night that wouldn't be too friendly on my well being.
Ok, I got to go. I would try to update as much as possible but it'll depend on my schedule. Happy investing!
The next week would be a good week to start shopping around for more counters to hold for the mid to long term. Will be off short term trading for a while, as it would require constant monitoring in the night that wouldn't be too friendly on my well being.
Ok, I got to go. I would try to update as much as possible but it'll depend on my schedule. Happy investing!
Friday, August 14, 2009
Start shopping again
Haven't blogged in a while as the new school term had started, and there were plenty to be busy with.
Had sold off about half of my SGX stocks before and slightly after the market had corrected, and while the index hovers around the region of 2600 and prices of some counters have dipped, it is time for some stock shopping again.
Having made the mistake of overdiversifying earlier on, I had to be more selective this time around. The thing about buying a little of everything actually increased risk exposure, and profits if any, were little for each counter. Hence the investment horizon had to be longer if any significant gain were to be realised across the stocks.
Decided to focus more on the REITs and property stocks this time around. Bought in Yanlord Land in the morning, and still queueing for Allgreen Properties.
Had sold off about half of my SGX stocks before and slightly after the market had corrected, and while the index hovers around the region of 2600 and prices of some counters have dipped, it is time for some stock shopping again.
Having made the mistake of overdiversifying earlier on, I had to be more selective this time around. The thing about buying a little of everything actually increased risk exposure, and profits if any, were little for each counter. Hence the investment horizon had to be longer if any significant gain were to be realised across the stocks.
Decided to focus more on the REITs and property stocks this time around. Bought in Yanlord Land in the morning, and still queueing for Allgreen Properties.
Friday, August 7, 2009
Fabchem China reports highest ever quarterly revenue
Fabchem China reports highest ever quarterly revenue
Admist investors cashing out and the market correcting, some good news released at noon sent the stock price of Fabchem to a high of $0.19. This is quite a jump considering the price has been hovering around the likes of $0.11 to $0.13 for the past 2 months at least.
For a better picture, you can check out the company info and charts at SGX under company all-in-one information.
Bullish sentiment surrounding Fabchem is likely to carry on to next week.
Admist investors cashing out and the market correcting, some good news released at noon sent the stock price of Fabchem to a high of $0.19. This is quite a jump considering the price has been hovering around the likes of $0.11 to $0.13 for the past 2 months at least.
For a better picture, you can check out the company info and charts at SGX under company all-in-one information.
Bullish sentiment surrounding Fabchem is likely to carry on to next week.
Thursday, August 6, 2009
a correction
Sold off a considerable number of counters yesterday and this morning. It seemed that the market has started a correction as the STI plunged back to around 2600. It's a good thing I've decided to cash out on several counters to recoup some capital for the next uptrend. Perhaps an index of 2550 would warrant a re-entry into the market, this time focusing on certain sectors like technology.
Had some 'excitement' in the US market last night, where stocks were on a rally. Managed to capitalize a little on the wide and crazy fluctuations of Amercian Axle and Manufacturing and did some day trading.
Perhaps one could pay some attention to Citigroup tonight.
Had some 'excitement' in the US market last night, where stocks were on a rally. Managed to capitalize a little on the wide and crazy fluctuations of Amercian Axle and Manufacturing and did some day trading.
Perhaps one could pay some attention to Citigroup tonight.
Monday, August 3, 2009
cashing out...
So the rallying continues through the most of last week and peaked at 2680 as it closed about an hour ago.
Cashed out of several counters today. These include Hyflux water trust, Hupsteel, China New Town Infrastructure and NOL. For the first three mentioned, it just seemed that steam was dying out for them considering the looks of the MACDs and moving averages. NOL had an unusual spike in prices today, and hit $1.78, close to its year high of $1.82. All these after hitting a low of $1.65 in the morning. I've seen enough volatility in NOL and is not one of the counters I would wish to hold over the next few months.
I have the intention of streamlining my portfolio over the next week or so and getting back the capital for the next market correction, when I can finally correct my mistake of over-diversification.
Cashed out of several counters today. These include Hyflux water trust, Hupsteel, China New Town Infrastructure and NOL. For the first three mentioned, it just seemed that steam was dying out for them considering the looks of the MACDs and moving averages. NOL had an unusual spike in prices today, and hit $1.78, close to its year high of $1.82. All these after hitting a low of $1.65 in the morning. I've seen enough volatility in NOL and is not one of the counters I would wish to hold over the next few months.
I have the intention of streamlining my portfolio over the next week or so and getting back the capital for the next market correction, when I can finally correct my mistake of over-diversification.
Tuesday, July 28, 2009
Buy and hold
Judging from the earning potential of the counters I am currently having, it would take a while before I actually cash out. Afterall, this will not be like the short rally that took place more than a month ago, and the normal market corrections will be expected as stocks continue on an upward trend.
Better than expected economic numbers and near zero interest rates have brought back market liquidity and trading volume into equities. It is this time when small players put their money into the market, either because they are truly confident of the economy or simply driven by the fear of missing the uptrend. In any case, there is defintiely potential for the market to continue growing for the next couple of months.
Having held my bundle of small caps for a couple of months, it is about time I see some performance from them.
Better than expected economic numbers and near zero interest rates have brought back market liquidity and trading volume into equities. It is this time when small players put their money into the market, either because they are truly confident of the economy or simply driven by the fear of missing the uptrend. In any case, there is defintiely potential for the market to continue growing for the next couple of months.
Having held my bundle of small caps for a couple of months, it is about time I see some performance from them.
Friday, July 24, 2009
CharteredSC
The recent upward momentum has expectedly pushed the STI past the 2500 mark this morning, and it has shown no signs of abating, at least for now.
With some additional capital on hand, I made a purchase of Chartered Semiconductor earlier at $2.24, as it just seems to be picking up steam on the uptrend and I will be expected to rise over the next week or so. Prices have finally breached the upper resistance levels in the MACD and Bollinger after spending several weeks below/within them.
The technology sector has probably also seen its worse in Q1 2009, and would be en route to a steady recovery. Afterall, US giants from the technology sector Intel, IMB and Texas Instruments have reported stronger than expected results in Q2, and this would be a great sign to local players like Chartered, which will benefit from the blossoming of certain US tech companies which it has contracts with.
Other local listed firms in the tech sector: Armstrong, Nera Telecommunications, Venture
With some additional capital on hand, I made a purchase of Chartered Semiconductor earlier at $2.24, as it just seems to be picking up steam on the uptrend and I will be expected to rise over the next week or so. Prices have finally breached the upper resistance levels in the MACD and Bollinger after spending several weeks below/within them.
The technology sector has probably also seen its worse in Q1 2009, and would be en route to a steady recovery. Afterall, US giants from the technology sector Intel, IMB and Texas Instruments have reported stronger than expected results in Q2, and this would be a great sign to local players like Chartered, which will benefit from the blossoming of certain US tech companies which it has contracts with.
Other local listed firms in the tech sector: Armstrong, Nera Telecommunications, Venture
Wednesday, July 22, 2009
As markets take baby steps toward recovery...
In 'Winners in the next bull market', The Business Times July 22 Wednesday, James Stack, editor of the InvesTech Market Analyst newsletter, noted that stocks that tend to lose the most in a bear market are the best performers in the previous bull market.
However, he also clarified that these were the same sectors that regain their leadership status when the economy comes out from the downturn, simply because they fell the most.
Considering the example of US technology shares in the late 90s, these were the darlings of the day that crashed the hardest in the bears of 2000 to 2002. However, they too, rebounded the quickest for the first months after the bear market, significantly outpacing the rise of the index.
It is still crucial to note that sentiments still play a great role in trading volume and possibly rate of recovery of certain sectors. For once actual valuation of the sectors comes into play, it is still up to the cash flow, revenue and sustainability of the industry. The tech bubble that burst showed that tech firms back then were more hype than substance.
So as the market recovery progresses modestly, which sector should we pay attention to to lead us on? According to Gordon Fowler, the chief investment officer at Glenmede, an investment firm in Philadelphia, this will largely depend on what type of recovery is ahead.
For instance, expectation of a speedy recovery would mean a bet on economically sensitive investments, such as financial shares and emerging market stocks. However, if the economy is expected to remain weak over a sustained period of time even after a turnaround, then good growth companies with solid balance sheets will be a good choice. In the case of US, equities that do not rely significantly on consumption will be nice bets.
Mr Fowler also said that the US technology companies, which traditionally stood to gain in both strong and weak markets, had repaired their balance sheets after the last downturn, and hence were good companies that now even held more cash than any other sector.
However, he also clarified that these were the same sectors that regain their leadership status when the economy comes out from the downturn, simply because they fell the most.
Considering the example of US technology shares in the late 90s, these were the darlings of the day that crashed the hardest in the bears of 2000 to 2002. However, they too, rebounded the quickest for the first months after the bear market, significantly outpacing the rise of the index.
It is still crucial to note that sentiments still play a great role in trading volume and possibly rate of recovery of certain sectors. For once actual valuation of the sectors comes into play, it is still up to the cash flow, revenue and sustainability of the industry. The tech bubble that burst showed that tech firms back then were more hype than substance.
So as the market recovery progresses modestly, which sector should we pay attention to to lead us on? According to Gordon Fowler, the chief investment officer at Glenmede, an investment firm in Philadelphia, this will largely depend on what type of recovery is ahead.
For instance, expectation of a speedy recovery would mean a bet on economically sensitive investments, such as financial shares and emerging market stocks. However, if the economy is expected to remain weak over a sustained period of time even after a turnaround, then good growth companies with solid balance sheets will be a good choice. In the case of US, equities that do not rely significantly on consumption will be nice bets.
Mr Fowler also said that the US technology companies, which traditionally stood to gain in both strong and weak markets, had repaired their balance sheets after the last downturn, and hence were good companies that now even held more cash than any other sector.
Monday, July 20, 2009
Certain stocks to monitor
Haven't updated over the weekend as I felt really sick. It's good though, that I've recovered sufficiently today to study the markets once again as it opens for this new week.
At the point of typing, the STI is at 2447 points. Sentiments have been rather bullish and there are certain counters worth taking note of that I feel have potential riding on this uptrend.
One of which is Raffles Education Corp and the other STI ETF, which is SGX's own exchange traded fund. There seems to be divergence on the MACD and prices have crossed the moving average. Furthermore, prices on both counters have passed their previous resistance level.
Other counters I am currently monitoring closely include Hyflux water trust and Singtel. Hyflux water trust has been bullish recently, with prices greatly exceeding the previous resistance level. Prices seem lofty at this point in time but the next few days will provide a better idea on its direction and sustainability. Singtel has been on a consistent uptrend but gains might taper off if prices start to fall or move sideways. However, there are coming dividends on Singtel on the 5 August. This might push the prices up further till then. Close attention is needed for Singtel this week.
Happy trading!
At the point of typing, the STI is at 2447 points. Sentiments have been rather bullish and there are certain counters worth taking note of that I feel have potential riding on this uptrend.
One of which is Raffles Education Corp and the other STI ETF, which is SGX's own exchange traded fund. There seems to be divergence on the MACD and prices have crossed the moving average. Furthermore, prices on both counters have passed their previous resistance level.
Other counters I am currently monitoring closely include Hyflux water trust and Singtel. Hyflux water trust has been bullish recently, with prices greatly exceeding the previous resistance level. Prices seem lofty at this point in time but the next few days will provide a better idea on its direction and sustainability. Singtel has been on a consistent uptrend but gains might taper off if prices start to fall or move sideways. However, there are coming dividends on Singtel on the 5 August. This might push the prices up further till then. Close attention is needed for Singtel this week.
Happy trading!
Thursday, July 16, 2009
Bulls are back...for the moment
The STI has begun an uptrend as it finally breached the 2400 support level this morning. This reversal of a downtrend signals an appropriate time to purchase counters that have been posting consistent profits and have healthy cash flow, in other words, counters with high intrinsic value.
Financial and property counters are expected to lead the uptrend, with local banks likely to benefit from the pullback of foreign banks from corporate lending and also the recent suspension of several bond markets has shifted business to direct bank lending. In the property market, recent boom in sales of private residentials has been due to price cuts from developers.
The jittery fluctuations in the STI between 2200 and 2300 the past 2 weeks due to apprehension of the investors have been somewhat mild yet stable relative to the weak US market. Trading volume had been low, but sentiment is going north for this 2nd quarter with a rise in GDP forecast and fewer job losses.
The moving average convergence divergence (MACD) registered a bullish divergence yesterday, similar to the ones on 13 March and 4 May, when rallies followed. If this uptrend persists, the index will likely to hit 2500 by the end of next week, higher than the last attained peak of the rally that happened last month.
Financial and property counters are expected to lead the uptrend, with local banks likely to benefit from the pullback of foreign banks from corporate lending and also the recent suspension of several bond markets has shifted business to direct bank lending. In the property market, recent boom in sales of private residentials has been due to price cuts from developers.
The jittery fluctuations in the STI between 2200 and 2300 the past 2 weeks due to apprehension of the investors have been somewhat mild yet stable relative to the weak US market. Trading volume had been low, but sentiment is going north for this 2nd quarter with a rise in GDP forecast and fewer job losses.
The moving average convergence divergence (MACD) registered a bullish divergence yesterday, similar to the ones on 13 March and 4 May, when rallies followed. If this uptrend persists, the index will likely to hit 2500 by the end of next week, higher than the last attained peak of the rally that happened last month.
Monday, July 13, 2009
Only buy equities you understand
Investors buy up worthless GM shares - Business Times Monday 13 July
Shares in "General Motors", the company says, are worthless. But many investors apparently have mmissed the message.
GM's stock, which now represents the company's bankruptcy estate, continued an improbable rise in price on Friday, prompting concern by company officials and securities regulators that investors are confused.
The stock, which trades under the ticker symbol GMGMQ, gained as much as 43% on Friday, after GM announced that it had completed the sale of its assets to an entirely new company.
From this, one can be reminded again that share prices are simply a gauge of market sentiment towards a certain stock, and money can still be made and lost despite the intrinsic value of a company like GM becoming nearly zero. A good lesson is to never buy stocks that you are unclear about, and this is a mistake that I had made once, buying the shares of Bankunited Financial without having sufficient understanding of the company's current status. It was quite an expensive lesson, but I'm glad I made this mistake early in my investing journey.
Shares in "General Motors", the company says, are worthless. But many investors apparently have mmissed the message.
GM's stock, which now represents the company's bankruptcy estate, continued an improbable rise in price on Friday, prompting concern by company officials and securities regulators that investors are confused.
The stock, which trades under the ticker symbol GMGMQ, gained as much as 43% on Friday, after GM announced that it had completed the sale of its assets to an entirely new company.
From this, one can be reminded again that share prices are simply a gauge of market sentiment towards a certain stock, and money can still be made and lost despite the intrinsic value of a company like GM becoming nearly zero. A good lesson is to never buy stocks that you are unclear about, and this is a mistake that I had made once, buying the shares of Bankunited Financial without having sufficient understanding of the company's current status. It was quite an expensive lesson, but I'm glad I made this mistake early in my investing journey.
Wednesday, July 8, 2009
low trading volumes; sideway prices
After much study of the moving averages and recent pricings, it seems that the profitable stocks in my portfolio are at a point that is slightly past the support level, but moving slightly sideways, at least for these couple of weeks. Not ready to sell yet.
I would probably just hold on to the counters until the trading volume picks up and the markets start gaining positive sentiment before I streamline my portfolio.
I would probably just hold on to the counters until the trading volume picks up and the markets start gaining positive sentiment before I streamline my portfolio.
The rules of trading and investing
Read a fairly interesting and insightful article in The Business Times 8 July Wednesday. Here are some excerpts I find useful in the article titled 'The rules of trading and investing' by Michael Preiss.
1)The market response to sell stocks now suggests a dose of nerves at the end of one of the best quarters for world stock market returns in history. It took the same nerves to go long and buy in March when everyone or at least most people were maximum bearish among widespread end-of-the-world sentiment.
2)Evidence on whether the positive economic currents have turned into profits for companies, which will start flowing soon, is needed before the rally can progress further.
3)Never, under any circumstance, add to a losing position...ever! (Citing the example of AIG going from US$55 to US$30 then to less than US$1)
4)Capital comes in 2 varieties: Mental and that which is in your pocket or account. Mental is the more important and expensive of the two. Holding to losing positions cost measurable sums of actual capital, but it cost immeasurable sums of mental capital, not to mention stress.
5)We can never know what price is 'low'.
6)In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. Markets can remain illogical longer than you or I can remain solvent. Illogic often reigns and markets are enormously inefficient despite what the academics believe.
7)Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In 'good times', even errors are profitable; in 'bad times' even the most well researched trades go awry.
8)It is imperative that we understand the fundamentals driving a trade, but also that we understand the market's technicals. When we do, then, and only then, can we or should we trade.
9)Bear markets are more violent than are bull markets and so also are their retracements. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making superhuman insights.
10)The hard trade is often the right trade: If it is easy to sell, don't; and if it is easy to buy, don't. Do the trade that is hard to do and that which the crowd finds objectionable.
It is really crucial to note at this point that prices are really a reflection of general market sentiment. In this much apprehension of economic recovery, stock trading volume has taken a serious hit, leading to falling prices and a lack of optimistic position buyers. On a personal front, it is time to recoup some capital, reorganize and average out with new counters.
1)The market response to sell stocks now suggests a dose of nerves at the end of one of the best quarters for world stock market returns in history. It took the same nerves to go long and buy in March when everyone or at least most people were maximum bearish among widespread end-of-the-world sentiment.
2)Evidence on whether the positive economic currents have turned into profits for companies, which will start flowing soon, is needed before the rally can progress further.
3)Never, under any circumstance, add to a losing position...ever! (Citing the example of AIG going from US$55 to US$30 then to less than US$1)
4)Capital comes in 2 varieties: Mental and that which is in your pocket or account. Mental is the more important and expensive of the two. Holding to losing positions cost measurable sums of actual capital, but it cost immeasurable sums of mental capital, not to mention stress.
5)We can never know what price is 'low'.
6)In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. Markets can remain illogical longer than you or I can remain solvent. Illogic often reigns and markets are enormously inefficient despite what the academics believe.
7)Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In 'good times', even errors are profitable; in 'bad times' even the most well researched trades go awry.
8)It is imperative that we understand the fundamentals driving a trade, but also that we understand the market's technicals. When we do, then, and only then, can we or should we trade.
9)Bear markets are more violent than are bull markets and so also are their retracements. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making superhuman insights.
10)The hard trade is often the right trade: If it is easy to sell, don't; and if it is easy to buy, don't. Do the trade that is hard to do and that which the crowd finds objectionable.
It is really crucial to note at this point that prices are really a reflection of general market sentiment. In this much apprehension of economic recovery, stock trading volume has taken a serious hit, leading to falling prices and a lack of optimistic position buyers. On a personal front, it is time to recoup some capital, reorganize and average out with new counters.
a quick update
Have been really busy of late hence the lack of posts. Having run out of capital for the time being, I am only left with the option of monitoring different counters that I can possibly sell off. The capital gained could probably be used to average out on US stocks which has taken quite a huge hit lately.
This is the time when I should be buying stocks on discount but sadly, the lack of capital prevents me from doing so. Hence it is always wise to have some capital in your account at any point in time. Never ever repeat my mistake or you will get helpless in times like these when you should be buying.
This is the time when I should be buying stocks on discount but sadly, the lack of capital prevents me from doing so. Hence it is always wise to have some capital in your account at any point in time. Never ever repeat my mistake or you will get helpless in times like these when you should be buying.
Wednesday, July 1, 2009
Buying at discounts
I have been reading the book 'Profit From The Panic' by Adam Khoo and have come across this small section on 'The Investing Philosophy of the World's Greatest Investors' on Page 99.
It says that all of the most successful stock market investors adopt a contrarian approach, which means that instead of following the crowd, they do the opposite. In fact, buying stocks is like shopping in the supermarket and any rational buyer will prefer the stocks to be on sale before a purchase is made. Of course, how much value we place over a stock with certain intrinsic value is important, but essentially, it's the cheaper the better.
This is one of the key points of value investing, where the buying price of a stock is especially important since you are depending on that gap between the undervalued price (if it is) and the intrinsic value of the stock. In Christopher Browne's 'The Little Book of Value Investing', the idea is to purchase stock when its value is a significant cut below the intrinsic value, brought about by pessimistic market sentiment. A simple market correction will then have positive effects on the counter, and a safety bearth will also be born, should the price fall slightly.
It's always difficult to tell when the prices are low enough, but if one is in the market not to time it, but for long term investing, it'll be fairly easy to know when to buy based on trends.
It says that all of the most successful stock market investors adopt a contrarian approach, which means that instead of following the crowd, they do the opposite. In fact, buying stocks is like shopping in the supermarket and any rational buyer will prefer the stocks to be on sale before a purchase is made. Of course, how much value we place over a stock with certain intrinsic value is important, but essentially, it's the cheaper the better.
This is one of the key points of value investing, where the buying price of a stock is especially important since you are depending on that gap between the undervalued price (if it is) and the intrinsic value of the stock. In Christopher Browne's 'The Little Book of Value Investing', the idea is to purchase stock when its value is a significant cut below the intrinsic value, brought about by pessimistic market sentiment. A simple market correction will then have positive effects on the counter, and a safety bearth will also be born, should the price fall slightly.
It's always difficult to tell when the prices are low enough, but if one is in the market not to time it, but for long term investing, it'll be fairly easy to know when to buy based on trends.
Sunday, June 28, 2009
momentum
The STI index had finally broken the 2300 barrier last Thursday or Friday after the end of the market rally which kept the index at a luke warm 2200 plus range. Investors have been cashing out under the doubt of sustainable growth of the economy.
SGX listed STI ETF had its prices drop below the 20 day moving average during the last 2 weeks, levelling out the upward sloping trend. Now that prices have passed the average once more, we will expect to see a slow and gradual increase in index as the market starts to build momentum over the coming week.
An optimistic prediction would see the ETF hitting at least $2.50 by end July, with direction of future movement heavily dependent on market sentiment. Judging from the performances between a portfolio of mid cap stocks and a one with small caps, it seems that the former is building up momentum more quickly than the latter.
With no major setback, the new support level should rest around the late 2200s.
SGX listed STI ETF had its prices drop below the 20 day moving average during the last 2 weeks, levelling out the upward sloping trend. Now that prices have passed the average once more, we will expect to see a slow and gradual increase in index as the market starts to build momentum over the coming week.
An optimistic prediction would see the ETF hitting at least $2.50 by end July, with direction of future movement heavily dependent on market sentiment. Judging from the performances between a portfolio of mid cap stocks and a one with small caps, it seems that the former is building up momentum more quickly than the latter.
With no major setback, the new support level should rest around the late 2200s.
Wednesday, June 24, 2009
ETFs
Let me take this entry to talk about Exchange Traded Funds (ETFs).
ETFs essentially peg themselves to the market index of the particular market and are actually made up of a basket of selected stocks. In other words, the ETF of a market is somewhat similar to a unit trust in terms of structure. Your broker would tell you, invest $200 a month in Unit Trust A and I'll use my expertise to gather returns from Company B based in Country C and Company D in Country E. You get the idea.
Unit trusts are necessarily more diverse, and you normally hear brokers raving on and on about how their funds are located across the globe. But how many people who buy mutual funds actually know and understand the companies their money is being put into? Personally, I wouldn't allow someone else manage my capital without truly having understanding and control (I shall elaborate later) over any fund.
The S&P 500 index in the US market for example, achieves an annual compounding return of about 12% over the long term. A mutual fund tagging companies around the world could earn more, but there is a significant chance of earning less either.
Of course, there are plenty of funds in the market that basically 'buy' the index, which begs the question of why anyone would choose to invest in an index fund rather than an ETF. Afterall, a mutual fund has higher management fees, as you are hiring someone professional to manage your funds on a regular basis, with all the paperwork thrown in. More importantly, an ETF, which comes in the form of a regular stock counter in the market, provides full control over when you can buy or sell, so long as there is a buy demand for the stock. This is different from mutual funds, which normally requires a minimum holding period and a longer process of redeeming your capital and returns.
Liquidity is key, and you want to have sufficient capital at any point of time to move from a less valuable asset class to another, or simply from one equity to the next.
ETFs essentially peg themselves to the market index of the particular market and are actually made up of a basket of selected stocks. In other words, the ETF of a market is somewhat similar to a unit trust in terms of structure. Your broker would tell you, invest $200 a month in Unit Trust A and I'll use my expertise to gather returns from Company B based in Country C and Company D in Country E. You get the idea.
Unit trusts are necessarily more diverse, and you normally hear brokers raving on and on about how their funds are located across the globe. But how many people who buy mutual funds actually know and understand the companies their money is being put into? Personally, I wouldn't allow someone else manage my capital without truly having understanding and control (I shall elaborate later) over any fund.
The S&P 500 index in the US market for example, achieves an annual compounding return of about 12% over the long term. A mutual fund tagging companies around the world could earn more, but there is a significant chance of earning less either.
Of course, there are plenty of funds in the market that basically 'buy' the index, which begs the question of why anyone would choose to invest in an index fund rather than an ETF. Afterall, a mutual fund has higher management fees, as you are hiring someone professional to manage your funds on a regular basis, with all the paperwork thrown in. More importantly, an ETF, which comes in the form of a regular stock counter in the market, provides full control over when you can buy or sell, so long as there is a buy demand for the stock. This is different from mutual funds, which normally requires a minimum holding period and a longer process of redeeming your capital and returns.
Liquidity is key, and you want to have sufficient capital at any point of time to move from a less valuable asset class to another, or simply from one equity to the next.
Monday, June 22, 2009
A quick Monday update
I have been busy with rehearsals and singing recently, hence the lack of updates. Anyway, this is a short article taken from TODAY June 22.
US home sales, consumer spending rise
Consumer spending in the United States probably rose last month for the first time in three months and home sales increased as Americans became more confident the recession would end this year, according to economists in a Bloomberg survey.
Purchases advanced 0.3%, according to the median of 58 estimates in the poll, ahead of US Commerce Department figures due on Friday. Combined sales of new and existing homes likely improved to 5.18 million, capping the first back-to-back increase since 2006, the survey showed.
"There's more optimism as we get further away from last year's financial-market chaos," said Mr Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
"Spending on the part of consumers seems to be picking up after a soft patch. It looks like the housing has bottomed." - BLOOMBERG
Sign of the things to come? Americans are heavy consumers, both imports and domestic products. An increase in consumer demand will boost demand for raw materials and employment, a good step in the recovery of the economy. Optimism and positive sentiment is the key to economic recovery, and lies in the mindset behind producers, consumers and investors. Afterall, the equity market is usually one step ahead of indicating what direction the economy is heading.
The STI remains sugglish for today, carrying on from last week's steady decline to Friday's 2273 level. Market sentiment is pretty weak and actually a good time to wait out as the moving averages are slowly leveling out and might go into a slight decline.
US home sales, consumer spending rise
Consumer spending in the United States probably rose last month for the first time in three months and home sales increased as Americans became more confident the recession would end this year, according to economists in a Bloomberg survey.
Purchases advanced 0.3%, according to the median of 58 estimates in the poll, ahead of US Commerce Department figures due on Friday. Combined sales of new and existing homes likely improved to 5.18 million, capping the first back-to-back increase since 2006, the survey showed.
"There's more optimism as we get further away from last year's financial-market chaos," said Mr Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
"Spending on the part of consumers seems to be picking up after a soft patch. It looks like the housing has bottomed." - BLOOMBERG
Sign of the things to come? Americans are heavy consumers, both imports and domestic products. An increase in consumer demand will boost demand for raw materials and employment, a good step in the recovery of the economy. Optimism and positive sentiment is the key to economic recovery, and lies in the mindset behind producers, consumers and investors. Afterall, the equity market is usually one step ahead of indicating what direction the economy is heading.
The STI remains sugglish for today, carrying on from last week's steady decline to Friday's 2273 level. Market sentiment is pretty weak and actually a good time to wait out as the moving averages are slowly leveling out and might go into a slight decline.
Wednesday, June 17, 2009
Lessons learnt so far
The past few days have been days of reflection on my current portfolio. The bear market rally is over and unrealized profits have fell quite considerably. This brings me to several lessons I have learnt and what should have been done.
1)Investing 100% of my capital at one point of time
As prices were low and relatively affordable over the past month, I had invested all of my capital. The bear market rally saw some nice returns on paper but the past week, when the rally ended and prices started to drop, I had no more capital to buy in more stocks now that prices were lower. It's not nice to feel cash strapped especially when an opportunity comes knocking.
2)Not selling all of a stock when deciding to cash in
Investing for the mid to long term as a primary objective, I also do active trading from time to time. One thing I have started to understand about myself is that I place huge satisfaction on ownership alone. It is also in those instances when I release all of a certain stock only for it to rise later when I feel like stabbing myself. Of course, it might fall and selling all at that time would be great, but I didn't like how I felt when the former happened, so I always make it a point to keep at least one lot of a certain stock at any point of time, only selling when a downward trend is imminent.
3)My serious problem of over-diversifying
Having my capital spread thin over 40 counters, I begin to realise that it is a grossly wrong strategy that I have been taking. Capital spread thin will mean that potential profits are spread way too thin and I was actually spreading my exposure to risk. WRONG...It is about time I become more discerning in my purchases and streamline the portfolio SIGNIFICANTLY.
4)The problem of micro-managing
I did not have the time to manage all the counters efficiently which resulted in less understanding and control over every single one. Again, a streamline is absolutely necessary in this case.
What I should do now..
Since the indexes have been down, I am betting on the support level of around 2100 for the market to start rising (if it ever does) before cashing out and reinventing my portfolio. I used to have this concept of a 'Winning 6' which I should get back soon hopefully. Ideally, this should be done before the market actually starts building due to stronger fundamentals rather than on sentiment.
1)Investing 100% of my capital at one point of time
As prices were low and relatively affordable over the past month, I had invested all of my capital. The bear market rally saw some nice returns on paper but the past week, when the rally ended and prices started to drop, I had no more capital to buy in more stocks now that prices were lower. It's not nice to feel cash strapped especially when an opportunity comes knocking.
2)Not selling all of a stock when deciding to cash in
Investing for the mid to long term as a primary objective, I also do active trading from time to time. One thing I have started to understand about myself is that I place huge satisfaction on ownership alone. It is also in those instances when I release all of a certain stock only for it to rise later when I feel like stabbing myself. Of course, it might fall and selling all at that time would be great, but I didn't like how I felt when the former happened, so I always make it a point to keep at least one lot of a certain stock at any point of time, only selling when a downward trend is imminent.
3)My serious problem of over-diversifying
Having my capital spread thin over 40 counters, I begin to realise that it is a grossly wrong strategy that I have been taking. Capital spread thin will mean that potential profits are spread way too thin and I was actually spreading my exposure to risk. WRONG...It is about time I become more discerning in my purchases and streamline the portfolio SIGNIFICANTLY.
4)The problem of micro-managing
I did not have the time to manage all the counters efficiently which resulted in less understanding and control over every single one. Again, a streamline is absolutely necessary in this case.
What I should do now..
Since the indexes have been down, I am betting on the support level of around 2100 for the market to start rising (if it ever does) before cashing out and reinventing my portfolio. I used to have this concept of a 'Winning 6' which I should get back soon hopefully. Ideally, this should be done before the market actually starts building due to stronger fundamentals rather than on sentiment.
Monday, June 15, 2009
Singtel launches Amped music service
Singtel has launched an online music store in conjunction with Universal Music to provide new and existing customers with unlimited downloads from the new music portal, which currently offers about 500000 songs.
This is the first of such a service provided by a telecommmunications service provider, as previous 'music stores' were only offered by specific phone companies such as Sony Ericsson.
So 'What lies behind Singtel's latest music foray?' - Business Times 15 June
The motivation behind the move by Singapore's most dominant telco is not about uncovering a new source of revenue, at least not for the short term, but to strengthen its existing market share.
Singapore's mobile penetration rate currently stands at 133.2% or 6.45 million cellular subscriptions within a population of 4.5 million. This market is already saturated, as it seems and product and service differentiation plays key in sustaining or growing market share.
Singtel is going in the right direction though, with the Iphone being in its stable and monopolistic ownership lasting till end 2010 at least. This service makes up for the absence of an Itunes store locally, and it gives budding users another reason to purchase an Iphone if bundle packages are competitively priced.
We should expect the 2 other telcos to come up with more competitive packages and prices to retain or win any potential customers in the face of Singtel's new competitive advantage.
Growth should be rather slow, however, given the nature of the sector, but stable. At below $3, the stock presents great value for long term holding. Afterall, we are looking at the dividends/yield of this stock, and the capital gains, secondary.
This is the first of such a service provided by a telecommmunications service provider, as previous 'music stores' were only offered by specific phone companies such as Sony Ericsson.
So 'What lies behind Singtel's latest music foray?' - Business Times 15 June
The motivation behind the move by Singapore's most dominant telco is not about uncovering a new source of revenue, at least not for the short term, but to strengthen its existing market share.
Singapore's mobile penetration rate currently stands at 133.2% or 6.45 million cellular subscriptions within a population of 4.5 million. This market is already saturated, as it seems and product and service differentiation plays key in sustaining or growing market share.
Singtel is going in the right direction though, with the Iphone being in its stable and monopolistic ownership lasting till end 2010 at least. This service makes up for the absence of an Itunes store locally, and it gives budding users another reason to purchase an Iphone if bundle packages are competitively priced.
We should expect the 2 other telcos to come up with more competitive packages and prices to retain or win any potential customers in the face of Singtel's new competitive advantage.
Growth should be rather slow, however, given the nature of the sector, but stable. At below $3, the stock presents great value for long term holding. Afterall, we are looking at the dividends/yield of this stock, and the capital gains, secondary.
Sunday, June 14, 2009
REITs
UOB-Kay Hian has called a buy on Frasers Centrepoint Trust (FCT), Ascendas Reit and K-Reit Asia. Apparently, the optimistic view on this sector has been related to lower inflation and lower refinancing risks, despite falling rents.
REITs or Real Estate Investment Trusts, have been one of my areas of focus recently. Having bought in several REITs such as CapitaComm(CCT), Suntec, Saizen and K-reit, I feel that the diversity in commercial, industrial and residential properties that these REITs cover should be a good long term equity investment.
Properties never go out of 'style', and generally stable given the nature of property holding and investment. The next 2 years should see gradual growth in this sector as the economy recovers and derived/end demand returns. The low interest rate should also see people putting their money in other asset classes other than in fixed deposits, and one of these might be in the property market.
Last month, CCT and Suntec Reit announced that they had secured loan facilities of $160 million and $825 million respectively, so refinancing should not be much of an issue in the short term.
Furthermore, our local REITs will be buffered from the inflation from US's take on quantitative easing (printing cash) due to the strong Singapore dollar. The coming week will be an interesting one to see how the prices of Ascendas and Frasers go. Afterall, target prices from UOB-KH are $1.93 and $1.44 respectively. Could consider if the STI takes a dip.
REITs or Real Estate Investment Trusts, have been one of my areas of focus recently. Having bought in several REITs such as CapitaComm(CCT), Suntec, Saizen and K-reit, I feel that the diversity in commercial, industrial and residential properties that these REITs cover should be a good long term equity investment.
Properties never go out of 'style', and generally stable given the nature of property holding and investment. The next 2 years should see gradual growth in this sector as the economy recovers and derived/end demand returns. The low interest rate should also see people putting their money in other asset classes other than in fixed deposits, and one of these might be in the property market.
Last month, CCT and Suntec Reit announced that they had secured loan facilities of $160 million and $825 million respectively, so refinancing should not be much of an issue in the short term.
Furthermore, our local REITs will be buffered from the inflation from US's take on quantitative easing (printing cash) due to the strong Singapore dollar. The coming week will be an interesting one to see how the prices of Ascendas and Frasers go. Afterall, target prices from UOB-KH are $1.93 and $1.44 respectively. Could consider if the STI takes a dip.
Friday, June 12, 2009
GM Stocks Plunge After Shareholder Warning
11 June 2009
NEW YORK (AP) -- General Motors Corp. shares tumbled in over-the-counter trading Thursday after the automaker said that it is "highly unlikely" that its shareholders will be able to recover any of their investments when the company emerges from bankruptcy protection.
In morning trading, GM shares dropped 22 cents, or 13.8 percent, to $1.36, after falling to $1.28 earlier in the day.
The drop same after six-straight days of gains for the Detroit-based automaker, which filed for Chapter 11 on June 1 and was subsequently delisted from the New York Stock Exchange. In the last six days, GM shares have more than doubled to close Wednesday at $1.59.
"While GM does not control the market or its stock price, GM management strongly believes that any recovery for the common stockholders in the chapter 11 bankruptcy process is highly unlikely, even under the most optimistic of scenarios," the company said in a statement late Wednesday.
In a chapter 11 situation, shareholders generally only receive a return on their investment if all claims of the company's creditors are fully paid.
I sold my GM shares last night before the prices could drop below sub-normal profit levels. The bullish sentiments the previous few days had been probably related to positive sentiments about a new and leaner GM with the recent appointment of a new chairman. I had held the counter for a while, through the weeks when it had hit excess of $2, thereafter dwindling to the levels of $1 and subsequently $0.70 before the bullish weeks when it hit $1.60.
Though the sales might be seen as little late, I am glad I decided to recoup some capital before it got any worse. There is a possibility of course, that share prices might sustain and the stocks will continue to do well after a new GM emerges.
However, it is not a risk I'm willing to take as common shareholders after all, only get a share after everyone else receives theirs.
NEW YORK (AP) -- General Motors Corp. shares tumbled in over-the-counter trading Thursday after the automaker said that it is "highly unlikely" that its shareholders will be able to recover any of their investments when the company emerges from bankruptcy protection.
In morning trading, GM shares dropped 22 cents, or 13.8 percent, to $1.36, after falling to $1.28 earlier in the day.
The drop same after six-straight days of gains for the Detroit-based automaker, which filed for Chapter 11 on June 1 and was subsequently delisted from the New York Stock Exchange. In the last six days, GM shares have more than doubled to close Wednesday at $1.59.
"While GM does not control the market or its stock price, GM management strongly believes that any recovery for the common stockholders in the chapter 11 bankruptcy process is highly unlikely, even under the most optimistic of scenarios," the company said in a statement late Wednesday.
In a chapter 11 situation, shareholders generally only receive a return on their investment if all claims of the company's creditors are fully paid.
I sold my GM shares last night before the prices could drop below sub-normal profit levels. The bullish sentiments the previous few days had been probably related to positive sentiments about a new and leaner GM with the recent appointment of a new chairman. I had held the counter for a while, through the weeks when it had hit excess of $2, thereafter dwindling to the levels of $1 and subsequently $0.70 before the bullish weeks when it hit $1.60.
Though the sales might be seen as little late, I am glad I decided to recoup some capital before it got any worse. There is a possibility of course, that share prices might sustain and the stocks will continue to do well after a new GM emerges.
However, it is not a risk I'm willing to take as common shareholders after all, only get a share after everyone else receives theirs.
Thursday, June 11, 2009
Return of the bulls?
It was just over a week ago when I more or less decided to reap half of my portfolio returns. I was quite convinced that the STI will fall back to lower levels, though not to the level reached in early March. It was not until a few days back that I decided that it was not the risk I had wanted to undergo, and convinced myself to hold on to the counters, many of which were undervalued at the point of purchase. The new low, if it ever would to happen, won't justify a second purchase of the same counters.
I came across this fairly interesting business comment in the Today Newspaper on June 10 Wednesday. It is 'Bull-market story in the making?' by Matthew Lynn. In a nutshell, it has 4 logical arguments why this recent rally is not going to die down so soon, if it ever dies down.
Savings
People living on credit was one of the big reasons that led to the financial meltdown. It is stated that the US savings rate in April had jumped to 5.7%, the highest in 14 years. Households, much like banks, are repairing their balance sheets. Probably faced with the possibility of unemployment and further recession, people will want to save more. However with interest rates close to zero, it will bring greater value if the cash was placed in other assets like equities.
Inflation
According to the article, central banks around the world are following the policies of 'quantitative easing' aka printing money. Possible increases in inflation and the fear of it would cause people to convert their cash into other tangible asset classes that are able to sustain value. Equities will be something that can tide them over.
Takeover
The economies of Brazil, Russia, India and China are buying over businesses in the West, and they are willing to pay for them. This takeover boom will put a premium on these assets to be acquired, a factor which may push up the respective equity values.
Shareholders
Companies had various ways to raise capital: banks, bond markets, shareholders. They could even get a friendly private-equity firm to buy them out. In these few years following the meltdown, capital will be in short supply. Banks will not give out loans so readily. Shareholder importance, will hence, increase. Just look at the recent spate of right issues happening right here in SG, where companies seek to raise funds for debts and development. Increased shareholder significance will warrant greater dividends and stock prices.
Present portfolio in the US market is registering a loss of around 5%. It has been a rather bullish week for US stocks and I'm expecting it to hit an average loss of 3% tomorrow. Not touching them for the moment, as the small caps are picking up rather quickly and I have also expended my funds. We shall see.
I came across this fairly interesting business comment in the Today Newspaper on June 10 Wednesday. It is 'Bull-market story in the making?' by Matthew Lynn. In a nutshell, it has 4 logical arguments why this recent rally is not going to die down so soon, if it ever dies down.
Savings
People living on credit was one of the big reasons that led to the financial meltdown. It is stated that the US savings rate in April had jumped to 5.7%, the highest in 14 years. Households, much like banks, are repairing their balance sheets. Probably faced with the possibility of unemployment and further recession, people will want to save more. However with interest rates close to zero, it will bring greater value if the cash was placed in other assets like equities.
Inflation
According to the article, central banks around the world are following the policies of 'quantitative easing' aka printing money. Possible increases in inflation and the fear of it would cause people to convert their cash into other tangible asset classes that are able to sustain value. Equities will be something that can tide them over.
Takeover
The economies of Brazil, Russia, India and China are buying over businesses in the West, and they are willing to pay for them. This takeover boom will put a premium on these assets to be acquired, a factor which may push up the respective equity values.
Shareholders
Companies had various ways to raise capital: banks, bond markets, shareholders. They could even get a friendly private-equity firm to buy them out. In these few years following the meltdown, capital will be in short supply. Banks will not give out loans so readily. Shareholder importance, will hence, increase. Just look at the recent spate of right issues happening right here in SG, where companies seek to raise funds for debts and development. Increased shareholder significance will warrant greater dividends and stock prices.
Present portfolio in the US market is registering a loss of around 5%. It has been a rather bullish week for US stocks and I'm expecting it to hit an average loss of 3% tomorrow. Not touching them for the moment, as the small caps are picking up rather quickly and I have also expended my funds. We shall see.
Myths of investing part 2
Having taken a nice nap, I figured it was time to be back for more myths of investing. Having taken a glance at the SGX earlier on, I don't think there needs to be any adjustment for the day.
Myth #7 Strong economic growth and strong profit growth are good for stocks and poor economic growth and falling profits are bad
Generally true over the long term, but at cyclical extremes it is usually wrong and a big mistake. The crucial point according to the article is that stock markets are forward looking, so when data is really strong, due to strong economic data, the market has probably already factored it in. In fact, there may already be fear in the market about rising cost pressures and rising short term interest rates.
An interesting point to note in the article is the example of the bottoming out of the bear market in 2003, where global economic indicators were very poor and a general fear was off a "double dip" back into global recession. Despite this, stocks turned around, with better economic and profit news only coming later in the year.
Which leads me to relate to the present and I personally feel that markets would not dip back to sub 2000 levels (SGX) but continue from a slow upward climb to breach 2600 levels by end of 3rd quarter. That is..no major event further disrupting the recovery.
Myth #8 Strong demand for a particular product produced by a stock market sector should see stocks in the sector do well and vice versa
Nearly similar to #7, any good data for that sector should have already been reflected in the stock prices before the masses get hold of any news, which leads me to question the varying degrees of efficiency in the market, and whether it is actually possible to beat the market consistently. I shall attempt to touch on that in a later entry.
Myth #9 Having a well diversified portfolio means that an investor is free to take on more risk
Oliver comments that the common strategy to build up diverse porfolios less dependent on equities with greater exposure to things like hedge funds, commodities, direct property or infrastructure may in fact, cause the investor to avoid truly defensive asset classes such as government bonds. A diverse collection of risky assets apparently do not reduce overall portfolio risk but increase risk exposure overall, especially in the recent years and the global crisis, which basically affected most asset classes anyway.
Myth #10 Tax should be the key driver of investment decisions
Afterall, level of tax tapers off after a certain level of investment right? Hence, decisions to invest should be based on that. Probably to a certain extent, but the first priority should always be the value of the investment and the fundamentals of a company, not how much tax refund you can get.
Myth #11 Experts can tell you where the market is going
Bottom line: No one has a perfect crystal ball. Forecasts for economic indicators are useful but need to be treated with care. The key value in investment experts' analysis and forecasts is to get a idea on all issues surrounding the market and understand the general consensus. Experts are also useful in placing current events in their historical contexts, and this can provide valuable insights for investors in terms of market potential.
I was just telling my friend the other day that economic analysts basically were putting nothing across in the best way possible, because stock markets are volatile and no one can give a definite answer on how the market moves. It is afterall, just a prediction based on current values and information.
Ok, have finally touched on all the myths that the article has covered. Generally, these are pointers pointing toward market sentiment and crowd behavior, something commonly seen these days, especially in this so called 'bear market rally'. Just be careful and don't go too much with the crowd.
Myth #7 Strong economic growth and strong profit growth are good for stocks and poor economic growth and falling profits are bad
Generally true over the long term, but at cyclical extremes it is usually wrong and a big mistake. The crucial point according to the article is that stock markets are forward looking, so when data is really strong, due to strong economic data, the market has probably already factored it in. In fact, there may already be fear in the market about rising cost pressures and rising short term interest rates.
An interesting point to note in the article is the example of the bottoming out of the bear market in 2003, where global economic indicators were very poor and a general fear was off a "double dip" back into global recession. Despite this, stocks turned around, with better economic and profit news only coming later in the year.
Which leads me to relate to the present and I personally feel that markets would not dip back to sub 2000 levels (SGX) but continue from a slow upward climb to breach 2600 levels by end of 3rd quarter. That is..no major event further disrupting the recovery.
Myth #8 Strong demand for a particular product produced by a stock market sector should see stocks in the sector do well and vice versa
Nearly similar to #7, any good data for that sector should have already been reflected in the stock prices before the masses get hold of any news, which leads me to question the varying degrees of efficiency in the market, and whether it is actually possible to beat the market consistently. I shall attempt to touch on that in a later entry.
Myth #9 Having a well diversified portfolio means that an investor is free to take on more risk
Oliver comments that the common strategy to build up diverse porfolios less dependent on equities with greater exposure to things like hedge funds, commodities, direct property or infrastructure may in fact, cause the investor to avoid truly defensive asset classes such as government bonds. A diverse collection of risky assets apparently do not reduce overall portfolio risk but increase risk exposure overall, especially in the recent years and the global crisis, which basically affected most asset classes anyway.
Myth #10 Tax should be the key driver of investment decisions
Afterall, level of tax tapers off after a certain level of investment right? Hence, decisions to invest should be based on that. Probably to a certain extent, but the first priority should always be the value of the investment and the fundamentals of a company, not how much tax refund you can get.
Myth #11 Experts can tell you where the market is going
Bottom line: No one has a perfect crystal ball. Forecasts for economic indicators are useful but need to be treated with care. The key value in investment experts' analysis and forecasts is to get a idea on all issues surrounding the market and understand the general consensus. Experts are also useful in placing current events in their historical contexts, and this can provide valuable insights for investors in terms of market potential.
I was just telling my friend the other day that economic analysts basically were putting nothing across in the best way possible, because stock markets are volatile and no one can give a definite answer on how the market moves. It is afterall, just a prediction based on current values and information.
Ok, have finally touched on all the myths that the article has covered. Generally, these are pointers pointing toward market sentiment and crowd behavior, something commonly seen these days, especially in this so called 'bear market rally'. Just be careful and don't go too much with the crowd.
Myths of investing part 1
My dad, who has a bigger porfolio (not necessarily more diverse though) told me once to predict what most common investors were up to, basically their sentiments, and then make decisions based on what might not be a herd instinct. I had never really gotten hold on the point he was trying to make, but an article in The Business Times on 10 June clarified some doubts that I had.
This article is called 'Myths that stand in the way of investors' by Shane Oliver. The 11 myths he has stated make much sense, and provides me much needed insight into equity and sentiments.
Myth #1 High unemployment will prevent an economic recovery
As interest rate falls, the boost to household discretionary income from lower mortage bills, tax cuts or stimulus payments will offset the fear of unemployment for the bulk still employed, and consumption will then pick up from there. As we all know, consumption boosts output and derived demand. One good point to note here is that share markets normally lead economic recoveries, and a peak in unemployment comes a long time after shares have bottomed.
Myth #2 Business won't invest when capacity utilisation is low
Cap utilisation is low in a recession simply because consumer and business spending (investment) is weak. With a pick up in demand, profits go up and drives a increase in business investment which leads to increase in capacity utilisation. An increase in demand maybe in the later part of the year may lead to increased investment although production plants may still be idle.
Myth #3 Corporate CEOs, being close to the ground, should provide a good guide to where the economy is going
It is pretty interesting how some papers and financial annuals publish 'insider movements', on the various purchases and sales of the big shots in the company, and in previous books I've read, following closely insider movements might be a good way of learning which way a company is going. According to Oliver, these people are often overwhelmingly influenced by their own sales figures and have no particular lead on the future. This does not mean though, that their comments are worthless, but should be seen as telling us where we are rather than where we are heading. This is right, for one can never base our decisions on the actions of a few, whose investing goals might be significantly different from us, not to mention the massive amounts of capital we lack.
Myth #4 The economic cycle is suspended
I have always been a firm believer of business cycles, because simply what goes up will eventually come down and vice versa. It is just simply the mechanisms of business interest and consumer sentiments working the demand and supply, which determines the peaks and troughs. Oliver states that 'new eras of prosperity' and 'continued tough times' are common talk when the extremes of both states of the economy are reached. However, history has shown us otherwise. This has also been one of my pillars of confidence behind some of my more risky investment decisions.
Myth #5 Crowd support for a particular investment indicates a good thing
It's a 'safety in numbers' concept that investors have in mind when they put their money in an equity that everyone else has their capital in. This approach is a trap. The reason being, if everyone is bullish about a certain stock, there will be no one left to buy when there is more good news, but there is plenty to sell if some bad news hit. 'Investors' who do this usually base a lot on sentiments rather the actual value of a stock, and I feel this might be the reason how big players manipulate a counter, using market sentiment and media exposure of certain equities, and pull the plug when the time comes. Another reason why sentiment is never a good basis of choice to invest.
Myth #6 Recent past returns are a guide to the future
The difficulty in processing information, short memories and wishful thinking, recent poor returns are assumed to continue and vice versa for strong returns. This, combined with the problem of 'safety in numbers' will result in investors getting into the markets at the wrong times: buying high and selling low.
I shall continue with the rest of the myths in my next posting, probably in the evening after the SGX closes and before the US market starts business.
This article is called 'Myths that stand in the way of investors' by Shane Oliver. The 11 myths he has stated make much sense, and provides me much needed insight into equity and sentiments.
Myth #1 High unemployment will prevent an economic recovery
As interest rate falls, the boost to household discretionary income from lower mortage bills, tax cuts or stimulus payments will offset the fear of unemployment for the bulk still employed, and consumption will then pick up from there. As we all know, consumption boosts output and derived demand. One good point to note here is that share markets normally lead economic recoveries, and a peak in unemployment comes a long time after shares have bottomed.
Myth #2 Business won't invest when capacity utilisation is low
Cap utilisation is low in a recession simply because consumer and business spending (investment) is weak. With a pick up in demand, profits go up and drives a increase in business investment which leads to increase in capacity utilisation. An increase in demand maybe in the later part of the year may lead to increased investment although production plants may still be idle.
Myth #3 Corporate CEOs, being close to the ground, should provide a good guide to where the economy is going
It is pretty interesting how some papers and financial annuals publish 'insider movements', on the various purchases and sales of the big shots in the company, and in previous books I've read, following closely insider movements might be a good way of learning which way a company is going. According to Oliver, these people are often overwhelmingly influenced by their own sales figures and have no particular lead on the future. This does not mean though, that their comments are worthless, but should be seen as telling us where we are rather than where we are heading. This is right, for one can never base our decisions on the actions of a few, whose investing goals might be significantly different from us, not to mention the massive amounts of capital we lack.
Myth #4 The economic cycle is suspended
I have always been a firm believer of business cycles, because simply what goes up will eventually come down and vice versa. It is just simply the mechanisms of business interest and consumer sentiments working the demand and supply, which determines the peaks and troughs. Oliver states that 'new eras of prosperity' and 'continued tough times' are common talk when the extremes of both states of the economy are reached. However, history has shown us otherwise. This has also been one of my pillars of confidence behind some of my more risky investment decisions.
Myth #5 Crowd support for a particular investment indicates a good thing
It's a 'safety in numbers' concept that investors have in mind when they put their money in an equity that everyone else has their capital in. This approach is a trap. The reason being, if everyone is bullish about a certain stock, there will be no one left to buy when there is more good news, but there is plenty to sell if some bad news hit. 'Investors' who do this usually base a lot on sentiments rather the actual value of a stock, and I feel this might be the reason how big players manipulate a counter, using market sentiment and media exposure of certain equities, and pull the plug when the time comes. Another reason why sentiment is never a good basis of choice to invest.
Myth #6 Recent past returns are a guide to the future
The difficulty in processing information, short memories and wishful thinking, recent poor returns are assumed to continue and vice versa for strong returns. This, combined with the problem of 'safety in numbers' will result in investors getting into the markets at the wrong times: buying high and selling low.
I shall continue with the rest of the myths in my next posting, probably in the evening after the SGX closes and before the US market starts business.
Why I'm starting this...
My very first post at My Investor Info begins on a beautiful Thursday morning in the second week of June, somewhere near the middle of the long term break from school. The motivation for starting this blog comes from the thought of compiling useful information regarding equities and investing that I have read into a space where I can constantly refer to.
Essentially, I'm starting this to function as a notebook of investor and financial information, minus the glue and paper. I figured it would help me sort out my thoughts and remember better if I write it down.
Having only started in equity investing late last year after the financial system gave way, I am still pretty much a greenhorn in this area trying to learn as much as I can. Along the way, I'll be roping in the help of other like-minded friends in contributing to this blog. Hopefully, this collection of information can help us to become more informed investors.
I have always believed that investing is a necessary way of life and not just seen as something optional or like what some people say, gambling. It is only gambling if you do not know what you are doing. I have the strong belief that everyone who has the extra cash should seriously consider investing as it is one of the strongest ways to grow your wealth for a better future.
Ok, I shall start for good on the next post! Happy investing!
Essentially, I'm starting this to function as a notebook of investor and financial information, minus the glue and paper. I figured it would help me sort out my thoughts and remember better if I write it down.
Having only started in equity investing late last year after the financial system gave way, I am still pretty much a greenhorn in this area trying to learn as much as I can. Along the way, I'll be roping in the help of other like-minded friends in contributing to this blog. Hopefully, this collection of information can help us to become more informed investors.
I have always believed that investing is a necessary way of life and not just seen as something optional or like what some people say, gambling. It is only gambling if you do not know what you are doing. I have the strong belief that everyone who has the extra cash should seriously consider investing as it is one of the strongest ways to grow your wealth for a better future.
Ok, I shall start for good on the next post! Happy investing!
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