Well i never write any recommendation to buy any counter as i feel world stock market will collapse buy I think I wanna do that today. If you do not believe me, you can ignore me and forget about it but if you believe me give it a try.
2899.HK Zijin Mining.(p=2.24)
I'm sure everybody knows what happen to gold last friday. So try trade the counter and tale your profit before end of the day.
2600.HK Chalco.(p=2.90)
Everybody knows this is the worst performing HSI component counter of them all. It's time for it to roll. Trade it for few days but remember timing is essential.
0016 HK SHK Property. (p=52)
It's now at 52 but once it was a >150 dollar counter. It's "mother" 0086 SHK trading at less than 3X PE and it's the most valuable and certainly best developer in HK. Need i say more?
BHP Asx (p=21.90)
world largest mining company got hammered hard since few months ago and now trading at around 22.22. Attrative enough?
CSCO NYSE (p=15.17)
We all know last week CSCO was hammered only because bad report by some so-called "expert". Do the opposite thing!
TSM, NYSE (p=6.51)
Taiwan Semiconductor rally more than 11% last friday in US and traded at 6.47. Wait for better price and go for it. 6.30 maybe a great entry price. Trade it either in Taiwan or US.
That's all for now. I will do my trading now and i hope we'll have a profitable trading day.
20.11.08
Long Way To Go
When I started this blog last august i already warned you this crisis is the biggest ever in human history. This crisis is so big because unlike previous crisis, US is broke now. They owe Russia, Japan, China, India, Middle East and other countries trillions of dollar in the form of T-bill. US can't do like what they did in 1929 or 1979 anymore. They can't spend money to boost their economy because they are broke. In other word, we still have long way to go.
Dow close below 8k point. First time in 5 years and S/P 500 just 6.58 point above 800 level. 5 Years ago, Federal Reserve led by Alan Greenspan did a historical thing which is lowered the interest rate to 1%. So in other word, the business cycle only goes around once. Dow back to their 2003 level and interest rate back to their 2003 level which is 1%. That mean if you start buying stock at 2003, theoretically you are break even now. So where are the credit crisis?
That's why I said we still have long way to go. I think we will have this type of stock market at least until President Obama next Presidential election. Based on so many bad economy data, do you think Dow reach it's bottom only 42-43% of it's high? Not even 50% off for the biggest economic crisis? you definitely underestimate the power of this credit crisis and forget who is in control, stock market or economy as a whole?
Like I said many times, stock market crash did not and will never contribute to any crisis, recession or depression. It's the crisis, recession or depression that contribute to stock market crash.
Yesterday i read a very interesting article on when our stock market/ economy will recover and it's from a famous financial website. It said in best case scenario, World economy and stock market will reach its bottom end of this year and start recover next year. However the worst case scenario, stock market/ economic will reach its bottom on second quarter of 2009 and start recover on third quarter 2009.
Well, How can anybody in this world know when economy will recover? economy/ stock market bottoming on second quarter next year is the worst scenario? Give me a break.
Another important topic: Fair value vs Stabilizing. US official always try to stabilize price of US assets. They try to stabilize house price, share price, bond price etc. Well, the true fact is that those assets are overpriced then and overpriced now. What they did is not stabilizing but preventing those assets from dropping back to it's fair value. Every analyst in this world said stock market all over the world is cheap now but i think it's still expensive. It's still way above it's fair value.
If a stock's fair value is 1.00 and now trading at 2.50. Yes you can still make profit from it because of greater fool or turtle rules where high will go higher. However if that stock drop to 1.50 and you think it's cheap, you have a big chance of losing another 50 cents. No matter how hard government or investor try to prevent it from going to 1.00, eventually free market will prevail and normally if anybody try to fight free market, it will teach you a lesson and give you 0.75.
Same for US now, the harder US official try to prevent recession and stock market plunge, the worse it will create.
Trade Carefully and remember cash and risk management is king.
Dow close below 8k point. First time in 5 years and S/P 500 just 6.58 point above 800 level. 5 Years ago, Federal Reserve led by Alan Greenspan did a historical thing which is lowered the interest rate to 1%. So in other word, the business cycle only goes around once. Dow back to their 2003 level and interest rate back to their 2003 level which is 1%. That mean if you start buying stock at 2003, theoretically you are break even now. So where are the credit crisis?
That's why I said we still have long way to go. I think we will have this type of stock market at least until President Obama next Presidential election. Based on so many bad economy data, do you think Dow reach it's bottom only 42-43% of it's high? Not even 50% off for the biggest economic crisis? you definitely underestimate the power of this credit crisis and forget who is in control, stock market or economy as a whole?
Like I said many times, stock market crash did not and will never contribute to any crisis, recession or depression. It's the crisis, recession or depression that contribute to stock market crash.
Yesterday i read a very interesting article on when our stock market/ economy will recover and it's from a famous financial website. It said in best case scenario, World economy and stock market will reach its bottom end of this year and start recover next year. However the worst case scenario, stock market/ economic will reach its bottom on second quarter of 2009 and start recover on third quarter 2009.
Well, How can anybody in this world know when economy will recover? economy/ stock market bottoming on second quarter next year is the worst scenario? Give me a break.
Another important topic: Fair value vs Stabilizing. US official always try to stabilize price of US assets. They try to stabilize house price, share price, bond price etc. Well, the true fact is that those assets are overpriced then and overpriced now. What they did is not stabilizing but preventing those assets from dropping back to it's fair value. Every analyst in this world said stock market all over the world is cheap now but i think it's still expensive. It's still way above it's fair value.
If a stock's fair value is 1.00 and now trading at 2.50. Yes you can still make profit from it because of greater fool or turtle rules where high will go higher. However if that stock drop to 1.50 and you think it's cheap, you have a big chance of losing another 50 cents. No matter how hard government or investor try to prevent it from going to 1.00, eventually free market will prevail and normally if anybody try to fight free market, it will teach you a lesson and give you 0.75.
Same for US now, the harder US official try to prevent recession and stock market plunge, the worse it will create.
Trade Carefully and remember cash and risk management is king.
18.11.08
Why You Should Ignore "BUY" Recommendation By Investment Banks
First of all, all investment banks do not really care about their customer making profit or not, instead they just care about generate more revenue and posting more profit. So they will make a lot of "buy" recommendation for their customer. They never responsible for their call and when their recommendation did not work, they will come out with more facts to encourage you to believe their word and make you believe now you can buy it at low price. However they will never tell you how low is low. They seldom make "sell" recommendation since sell mean end of a transaction for a counter.
The reason they recommend a stock is very ridiculous. The method they use to determine a cheap stock is outdated. Most of the time they will used unsuitable accounting ratio to convince their customer such as Price/Earning Ratio and Price to book ratio. All of these ratio is useless and i will tell you why:
The single most commonly used ratio is P/E ratio. Investment banks will make a "buy" call on a stock when its PE ratio is below 10 or so. PE ratio is useless because it used previous earning level versus current price level which is completely misleading. Current and future earning level might not be as good as before. Just look at all the financials in NYSE earlier this year. They all trade at below 10x PE and look at them now.
Besides, PE ratio determine the outlook of future performance of a company. If a company trading at less than 5x PE, investor think its future is really cloudy. Forget about hidden treasure and greatest story never told, there are no good stock with low PE ratio nowadays. If a company is good, its price is low and its PE is low, i'm sure Mr Buffett, Mr Soros and all the big gun have spotted it.
Price to Book ratio is also useless as the book value, as it is conventionally computed, does not include intangible assets such as intellectual property and brands. Thus the book-value or net tangible assets may not be an appropriate measure for many firms.
Target price is another tool by investment banks to generate revenue. Target price is absolutely useless as nobody in this world can target the price of a stock 12 months from now. Target price real intention is to make investor greedy and buy that stock. I've seen target price for some company set as high as 200% from current price. If a stock can go that high in the next 12 months, why its price traded at current low level? and if that company secure any big project or goes for restructuring, insider of that company should have already know and start buying so its price won't trade at its current price level.
Big Investment Banks such as Goldman Sachs and Morgan Stanley recommendation may have a short term impact but in the medium-long term, company fundamental is what counts. Eg. Goldman Sachs was traded at around 210 January this year and every investment bank recommended a buy for this company. I've seen target price of 250-485 by year end. It's PE is low, It's PB is low, biggest investment bank in the world.......Everything looks great. Well, now it's trade at 62.49 (plunge more than 65%).
So do not believe any recommendation by any investment banks especially a "buy" call with ridiculous high target price. Evaluate and study a company yourself and look at it past performance and future activity. Compare it to other company in the same sector. There are no free lunch in this world so you have to work hard to succeed.
Good luck!
The reason they recommend a stock is very ridiculous. The method they use to determine a cheap stock is outdated. Most of the time they will used unsuitable accounting ratio to convince their customer such as Price/Earning Ratio and Price to book ratio. All of these ratio is useless and i will tell you why:
The single most commonly used ratio is P/E ratio. Investment banks will make a "buy" call on a stock when its PE ratio is below 10 or so. PE ratio is useless because it used previous earning level versus current price level which is completely misleading. Current and future earning level might not be as good as before. Just look at all the financials in NYSE earlier this year. They all trade at below 10x PE and look at them now.
Besides, PE ratio determine the outlook of future performance of a company. If a company trading at less than 5x PE, investor think its future is really cloudy. Forget about hidden treasure and greatest story never told, there are no good stock with low PE ratio nowadays. If a company is good, its price is low and its PE is low, i'm sure Mr Buffett, Mr Soros and all the big gun have spotted it.
Price to Book ratio is also useless as the book value, as it is conventionally computed, does not include intangible assets such as intellectual property and brands. Thus the book-value or net tangible assets may not be an appropriate measure for many firms.
Target price is another tool by investment banks to generate revenue. Target price is absolutely useless as nobody in this world can target the price of a stock 12 months from now. Target price real intention is to make investor greedy and buy that stock. I've seen target price for some company set as high as 200% from current price. If a stock can go that high in the next 12 months, why its price traded at current low level? and if that company secure any big project or goes for restructuring, insider of that company should have already know and start buying so its price won't trade at its current price level.
Big Investment Banks such as Goldman Sachs and Morgan Stanley recommendation may have a short term impact but in the medium-long term, company fundamental is what counts. Eg. Goldman Sachs was traded at around 210 January this year and every investment bank recommended a buy for this company. I've seen target price of 250-485 by year end. It's PE is low, It's PB is low, biggest investment bank in the world.......Everything looks great. Well, now it's trade at 62.49 (plunge more than 65%).
So do not believe any recommendation by any investment banks especially a "buy" call with ridiculous high target price. Evaluate and study a company yourself and look at it past performance and future activity. Compare it to other company in the same sector. There are no free lunch in this world so you have to work hard to succeed.
Good luck!
17.11.08
Amzing Similarity Between The Movie "SAW" and US Economy
I just watched saw v and i got to say it's great like all other saw movie. I'm amazed a movie franchise can maintain it's quality after fifth installment since most movie franchise died because of low quality.
Although John Kramer is dead, his game is continuing with his new apprentice and again, those traps are so creative you simply have to watch it.
After watching it, i found a similarity between "saw" and US economy. In "saw", usually the victim who did something wrong in the past(murder, rape etc.) will be put in a trap and the victim has a choice: lose part of his/her body that did the wrong thing or lose his/her life.
US economy now is also been put in a giant trap of credit crisis and it has a choice to make: lose part of it's body(financial companies with bad management, bad automaker, low quality management companies) or lose it's life.
As in the movie, most of jigsaw's victim choose to die, i hope US will choose the other
Although John Kramer is dead, his game is continuing with his new apprentice and again, those traps are so creative you simply have to watch it.
After watching it, i found a similarity between "saw" and US economy. In "saw", usually the victim who did something wrong in the past(murder, rape etc.) will be put in a trap and the victim has a choice: lose part of his/her body that did the wrong thing or lose his/her life.
US economy now is also been put in a giant trap of credit crisis and it has a choice to make: lose part of it's body(financial companies with bad management, bad automaker, low quality management companies) or lose it's life.
As in the movie, most of jigsaw's victim choose to die, i hope US will choose the other
15.11.08
How To Predict Stock Market Movement Correctly
Check out my part 2 of predicting stock market movement here
Yesterday one of my friend ask me this question:
How to predict the stock market movement correctly.
Well, I can't say i'm an expert in this but i got some thought about it so i would like to share on you.
First of all, in short term, stock market like other markets is irrational and full of emotional trade. Hedge Fund Dominate the short term market and try to create different scenario or emotion such as greed, fear and hope. Only way to win is to guest what will hedge fund do. There are very little technical analysis knowledge involved, very little basis knowledge of stock market involved.
Example, on Oct. 28, 2008, S/P 500 and Dow Jump more than 10% without any good news at all. Some call it bargain hunting or technical rebound or short seller covering position but none of that's true simply because those reason won't make stock market jump 10% in 1 day. Only way a stock market anywhere on planet can do that is some fund manager dump money in without looking at it.
Another example: yesterday Dow and S/P 500 jump 7% and again we see the word such as bargain hunting. For me, bargain hunting stop when Dow hike 3-4%. The rest is irrational.
For Long term however, we need something more than guesting to win. Here are what i think from my experience:
50% economic knowledge. Have you wonder why some Analyst can predict market so accurately? Some may say they got lucky. Other even say market is only up or down so it's a 50% chance of getting right. However, to be as accurate as Jim Rogers, Marc Faber or Peter Schiff you certainly need more than luck. They can predict the stock market so accurately because they look at stock market as an entity of whole economic activity. Yes, you can have a rally after a bad economy news but in the long term, everything will unfold and stock market will head towards the place it should go.
40% Technical Analysis Knowledge. Yes, in long term trading, you still need technical analysis knowledge to predicts the movement of stock market to avoid big technical rebound that can't be explained by economic term. Eg. US dollar has rally for few months now and by looking from economic point of view it simply does not make sence. However with technical analysis knowledge, you can easily see how bad US dollar is oversold and how bad other liquid assets are overbought last year so deleveraging process could take months.
10% luck or ability to control emotion. You still need luck since no body knows what bad thing can happen ad yes, long term trading still involve emotion but rather small compare to long term trading.
Here is just my point of view from my experience in stock market. You still need to develop your own winning formula to beat the market. Like i said there are no person that's always win and no person that's always lose but you certainly can do yourself a favor and avoid losing all your money just simply because lack of winning formula.
Yesterday one of my friend ask me this question:
How to predict the stock market movement correctly.
Well, I can't say i'm an expert in this but i got some thought about it so i would like to share on you.
First of all, in short term, stock market like other markets is irrational and full of emotional trade. Hedge Fund Dominate the short term market and try to create different scenario or emotion such as greed, fear and hope. Only way to win is to guest what will hedge fund do. There are very little technical analysis knowledge involved, very little basis knowledge of stock market involved.
Example, on Oct. 28, 2008, S/P 500 and Dow Jump more than 10% without any good news at all. Some call it bargain hunting or technical rebound or short seller covering position but none of that's true simply because those reason won't make stock market jump 10% in 1 day. Only way a stock market anywhere on planet can do that is some fund manager dump money in without looking at it.
Another example: yesterday Dow and S/P 500 jump 7% and again we see the word such as bargain hunting. For me, bargain hunting stop when Dow hike 3-4%. The rest is irrational.
For Long term however, we need something more than guesting to win. Here are what i think from my experience:
50% economic knowledge. Have you wonder why some Analyst can predict market so accurately? Some may say they got lucky. Other even say market is only up or down so it's a 50% chance of getting right. However, to be as accurate as Jim Rogers, Marc Faber or Peter Schiff you certainly need more than luck. They can predict the stock market so accurately because they look at stock market as an entity of whole economic activity. Yes, you can have a rally after a bad economy news but in the long term, everything will unfold and stock market will head towards the place it should go.
40% Technical Analysis Knowledge. Yes, in long term trading, you still need technical analysis knowledge to predicts the movement of stock market to avoid big technical rebound that can't be explained by economic term. Eg. US dollar has rally for few months now and by looking from economic point of view it simply does not make sence. However with technical analysis knowledge, you can easily see how bad US dollar is oversold and how bad other liquid assets are overbought last year so deleveraging process could take months.
10% luck or ability to control emotion. You still need luck since no body knows what bad thing can happen ad yes, long term trading still involve emotion but rather small compare to long term trading.
Here is just my point of view from my experience in stock market. You still need to develop your own winning formula to beat the market. Like i said there are no person that's always win and no person that's always lose but you certainly can do yourself a favor and avoid losing all your money just simply because lack of winning formula.
14.11.08
Finally President Bush Said Something Right
Bush defends capitalism on eve of economic summit
NEW YORK (AP) — President George W. Bush fervently defended U.S.-style free enterprise Thursday as the cure for the world's financial chaos, not the cause. He warned foreign leaders ahead of a weekend summit not to crush global growth with restrictive new rules.
"We must recognize that government intervention is not a cure-all," Bush said from Wall Street, setting his own tone for the two-day meeting that begins Friday in Washington seeking solutions to the economic crisis that has spread around the world.
"Our aim should not be more government," he told the business executives. "It should be smarter government."
The president acknowledged that governments share the blame for the severe economic troubles that have hit banks, homes and whole countries.
He spelled out his prescription, which includes tougher accounting rules and more modern international financial institutions. But he stopped short of the tighter oversight and regulation that European leaders want. All his ideas came with a warning: Don't disturb capitalism.
"In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed, exploitation and failure," Bush said.
"It is true that this crisis included failures, by leaders and borrowers, by financial firms, by governments and independent regulators," Bush said. "But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system."
That warning about the dangers of too much government intervention came not long after he championed the biggest bailout in U.S. history: a $700 billion taxpayer-funded plan to rescue the financial industry. His government has also signed off on costly rescues for housing, insurance and other financial institutions.
The U.S. wields enormous clout in any global response to the economic crisis, and Bush is host for the weekend gathering, bringing together heads of state from the world's biggest economies as well as emerging nations. It is intended to be the first in a series.
But Bush's personal influence is waning.
In about two months, Democrat Barack Obama will take over as president. Though the president-elect does not plan to attend this summit, he has authorized former Iowa Rep. Jim Leach and former Secretary of State Madeleine Albright to represent him. Obama's transition team says they will primarily be listeners on the periphery of the meetings.
The world leaders come to Washington with their own ideas for change. French President Nicolas Sarkozy, British Prime Minister Gordon Brown and others are advocating a broader overhaul of financial regulations than Bush wants. The Europeans also want a pledge for concrete changes in just 100 days.
The stated goal for this weekend is to examine the causes of the crisis and begin mapping out principles for a response.
But Britain's Brown, on his way to the summit, declared, "There is a need for urgency."
It was fitting that Bush's argument against regulatory overreach was delivered not in Washington but on Wall Street. His speech venue was venerable Federal Hall, home to the first Congress and within shouting distance of the New York Stock Exchange.
There was freshly sobering news on the U.S. economy: The number of newly laid-off people seeking unemployment benefits jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks. Still the Dow Jones industrial average surged 553 points at the end of the trading day.
Some of Bush's admonitions raised questions about his own past actions, including last month's big bailout law.
Also, he is one of those voices from the right who railed about greed, saying in an unguarded moment in July that Wall Street "got drunk and now it's got a hangover."
On Thursday, he defended his administration against charges from some leaders that insufficient oversight and regulation in the U.S. contributed to — even caused — the mess by failing to raise alarms. Obama is among those who say no one was minding the people's business as the housing market plunged, credit markets ground to a halt and the broader financial system went into distress.
White House aides play down Bush's differences with other nations, saying the leaders have much in common, as evidenced by the gathering itself.
Bush's list of possible areas for agreement include:
_Bolstering accounting rules for stocks, bonds and other investments so investors have a clearer sense of the true value of what they buy.
_Requiring "credit default swaps" — a type of corporate debt insurance — to be processed through a central clearinghouse. That would help provide crucial information on the parties involved in these complex, unregulated products.
_Taking a fresh look at rules aimed at preventing fraud and manipulation in trading of stocks and other securities.
_Better coordinating financial regulations among countries.
_Giving more countries voting power at the International Monetary Fund and the World Bank.
Besides the United States, the countries represented at the White House dinner Friday and meetings on Saturday will be Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Those countries and the European Union make up the so-called G-20.
Australian Prime Minister Kevin Rudd said before he left for Washington that he would raise with fellow leaders his view that a system in which executives of financial firms are rewarded for maximizing risk "cannot be sustained." He said, "That's just dumb, it's wrong and it's bad."
Trade union leaders from participating countries planned to join AFL-CIO leaders Friday in meetings with several foreign heads of state, including Brazilian President Luiz Inacio Lula da Silva, and with IMF Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick.
The labor leaders are calling for re-regulation of global financial markets, an internationally coordinated fiscal stimulus and balanced economic growth to address income inequality.
AP writers Jeannine Aversa and Jim Kuhnhenn contributed to this story from Washington.
Copyright © 2008 The Associated Press. All rights reserved. 
Source: AP
Source: AP
Subscribe to:
Posts (Atom)