Tuesday, July 31, 2007

Straits announced force majeure on Sebuku coal operations

Was working when a friend told me about yongnam breaking resistance...yup..could be probably due to market sentiment. Drags down all the construction sector and the other pennies too. I'm worried about other things at the moment.

Before I left, I saw the announcement that straits asia resource made. 'Force majeure', french for "greater force", is a clause in contracts which frees one or both parties from liability or obligation when an extraordinary event or circumstances beyond the control of the parties, prevent them from fulfilling their obligations under the contract. War, strikes, riot, act of gods (in this case, heavy rains) are examples of situation where force majeure can be exercised.

According to their announcement, heavy rainfall over at Sebuku (South Kalimantan, Indonesia) had resulted in the disruption of mining operations. Not sure if straits have to pay penalties because force majeure can be partial or full. Have to wait for more announcements to be made.

I did some checking.

1. The heavy rainfall is due to the La nina effect currently affecting global climate around the world. La nina, opposite effect to El nino, causes cooling and more rain over the western equatorial Pacific, Indonesia and philippines and is nearly absent across the eastern equatorial Pacific.

2. Wetter than normal conditions tend to be observed during June-August and December-February period for Indonesia.

3. La Nina can last for 1-3 years (I've checked, usually 1 yr), occurring periodically every 3-5 years.

Assuming the worst is over around February, the force majeure might be extend to end of this year? Perhaps have to add in another time period for the mines to be recovered before mining activities can be resumed. If you look at the other areas that Straits operate in Australia, it seems its relatively untouched by La nina effect. Could the coal mining over at Australia be sufficient to cover the needs of Straits Asia pacific contract obligations? Will coal prices shoot up and affect the next financial year's negotiation of coal prices? Straits negotiate coal prices well in advance, so this year's drop in supply could mean higher coal prices next year?

Lots of questions, with no seemingly adequate answer.

Today's price action seems to suggest strong hands at work supporting Straits asia. Just last week, Fidelity funds bought into Straits, followed by directors buy in. A trick to get prices high so as to sell? Today the price dropped to 0.995 then rose up to 1.15 thereabouts. Shortists covering?

This might just be the best time to enter Straits asia.

My portfolio bleeding now, ouch.

Dow +72, europe all green.

Monday, July 30, 2007

Earnings results (partial)

Thought it'll be interesting to take a look at the results this earnings seasons. Some of the excellent results are shown by small caps, like see hup seng and OKP.

STI rebound with low volume (up 0.96%)

Oh man...so tired...

STI did a splendid rebound, rising 30 over points to close at 3526, with very low volume of 2.8 billion (not a good sign). The worst is not over yet. We have to see how the retracement is like after this rebound. If it goes below the previous low, the downtrend is not broken yet. Let's monitor the situation further.

My watchlist doesn't seem to enjoy much of a rebound. Construction stocks carried on its downtrend, with the exception of Chip eng seng, which announced trading halt after market close. No idea what's the announcement will be, and no point guessing given the bad market sentiment.

Pac andes broke out of descending triangle, so for the short term, it will carry on its downtrend, perhaps finding support at 0.755 (23.6% fibo retracement). I'm not worried about pac andes at all. HK pac andes announced results today and they had quite a good results with low PE. Be confident of this...just like fish you bought from the market, put it in the freezer and be ready to cook it during celebrative times :)

CHoffshore had a strong day today, with huge buyups, and intraday high of 1.050 breakiing it's all time high. I wonder what's the news about this? Haha, but I sold it already, not looking to buy it back in the short term.

Swiber made an announcement that its executive chairman reduced his stack in the company by selling in the open market on 19th July, way way before the big crash. Coincidence? Hmm... Swiber is still very strong.

Was recommended to this stock GK Goh. Might want to enter when it hits my entry point, which I set at 2 levels.

First is at 1.22 (weak support, though it's 23.6% fibo retracement). A better entry is 1.18, but is it too much to ask for? Looking at the indicators, might be reaching oversold region soon, so perhaps 1.22 is a good entry. Going to put it in my watchlist to monitor first.

Dow +30, europe mostly green. Let's see how STI fights back.

Sunday, July 29, 2007

GSS - Great Stock Sales!! 20-30% discount? haha

Wow...DJ dropped another 200 points. Haha, that makes it drop 500 points within 2 days! I read that it was the worst week for DJ since sept 2002...so serious ah? Hit by both credit problems and subprime problems?

Will STI gap down again tmr? I think so, at least in the morning. But after so much selling even before DJ major drop last week, I think it should be less severe. At least, the superb results pulled in by SGX should stem STI from bleeding so much. Haven't seen STI dropped so much since March this year, where it went below ema50 days. I think if you're feeling uncomfortable buying stocks, it should be the best time to enter the market.

Indeed, I'm feeling uncomfortable buying new stocks, even holding them. Really torn between protecting profits and holding out. That's why I'm not going to do chartings tonight. Really no point. Must switch between TA to FA now. What companies are good now with stable and good future cash flow?

I want to get into Swiber :) $3 anybody?

Construction stocks...hmm, when are they releasing contracts? I don't feel comfortable holding them anymore, haha :)

Oh, I finished this wonderful book by morningstar, really great. Am going to start analyzing some companies real soon, just to practice on my FA. Do watch out as I attempt my first and newbish attempt to fundamentally analyse a company and to do a really simple discounted cash flow (DCF) valuation of the company. Haha, trying real hard to fulfil my dream of joining value the value circle website ok?! Their criteria for joining is to submit an essay to be reviewed by a panel of investment analyst. Haha, that sounds challenging!

Haha, enough for now :) My portfolio went back to the red, with losses of -$2.8k. As long as it does not touch 5k loss, I'm not worried at all. Have a great week ahead!

Thks for all those who visited my blog! Almost reaching 4000 milestone within 2-3 weeks :) Looks like that's more notice of my blog, haha! Great to share and hear any views with anyone who wants to say something, so just post it in the chatbox :P

Saturday, July 28, 2007

Florida real estate bubble in 1920s

A lesson for the current situation in the property market. Are we doing the same thing as those people in the past? Read this and learn from it.

"Those who cannot remember the past are condemned to repeat it."
by George Santayana

Florida Real Estate Bubble

The 1920’s, in America, were a time of great prosperity. Skilled and educated working Americans had jobs providing numerous fringe benefits, paid vacations and pensions. In addition, automobiles were becoming commonplace for the wealthy and middle class allowing cross country travel. This good fortune set the stage for the Florida real estate bubble.

Starting in 1920, many Americans became enamored by the materialistic and prosperous lifestyle of the time. During this time, the stock market was moving forward at an extremely fast pace. Many investors were becoming quite wealthy. Florida became a hot spot for these newly rich people, who didn’t enjoy the cold. Many whole families took vacations to Florida. It was at this point that tourism started booming and land prices were skyrocketing. Many astute investors took notice and started buying Florida real estate. The population in Florida was growing exponentially and housing couldn’t meet the demand. Florida became the “playground of the rich and famous”. Illegal casinos and drinking parlors became widespread in Miami.

At this point, almost anybody could invest in Florida, even without much money. Credit was plentiful and soon everybody in Florida was either a real estate investor or a real estate agent. In 1922, the Miami Herald became the heaviest newspaper in the world as a result of its humongous real estate advertisements. People in the North heard about the real estate prices “doubling and tripling”, causing a snowball effect. Capital was rapidly pumped into the real estate market. Whole golf communities were developed, such as Temple Terrace. Resorts and retirement communities were developed almost overnight. Mansions were sprawling in every area, as were swimming pools. As always, waterfront property was the most desirable. Florida was seen as a veritable Utopia.

Real estate prices quadrupled in less than one year. An elderly man invested $1,700 in property and by 1925 the property was worth over $300,000! It seemed you could do no wrong by just buying any property in Florida and become a millionaire. By 1925, real estate prices had become so exorbitant that buying land wasn’t affordable any longer. New investors failed to arrive and old investors started to sell. Panic arrived, as it always does, and the real estate market crashed. Prices kept moving downwards as heavily indebted investors tried to sell to avoid bankruptcy. In most cases, no buyers arrived, and the investors were bankrupt from the enormous mortgages.

These are pictures taken from wikipedia of the failed development over at Florida, known as the Isola di Lolando. The concrete pilings for the development still sits there while the company, Shoreland Company and the Venetian Island company are no longer around.

To make matters even worse, a highly destructive hurricane ravaged South Florida in September 1926. The 125 mile an hour winds eventually turned Palm Beach County into swamp lands. After the storm, a huge tidal wave crashed upon the towns of Belle Glade and Moore Haven. Due to these horrible turn of events, over 13,000 homes were destroyed and 415 people died. Additionally, the arrival of the Mediterranean fruit fly obliterated the large citrus industry. It took years for Florida to fully recover, even through the highly prosperous time from 1925 to 1929. Florida was barely affected in the stock market crash of 1929 and the Great Depression, because of its poor financial state from the start.

Market crashes always occur in the same manner. Regardless of the market, the same simple psychological underpinnings are always at work. People who are caught up in a bubble never look back for historical examples. For this folly, they become paupers.

Friday, July 27, 2007


Lao sai lah, STI...in the morning dropped 100 plus points (3%), but recovered to close down 87 points at 3492, with rather respectable volume of 4.1 billion.

Surprised to see that Lian beng close up 0.005 and realised that they just released their quarterly results. From a glance, seems like they do pretty well, profit after taxation increased 183.7%. But on closer look, a can of worms opened. Revenue dropped 21.6%, while most of the income comes from 'other income', which includes things like forgiveness of loan from minority shareholder (seriously what the heck is this?). If most of the income comes from 'other' sources rather than their core, this is bad. Based on their core business alone, lianbeng quarterly gross profit dropped 26.7%.

Looking at the balance sheet, not optimistic as well. Rather weak balance sheet. I guess it's the norm for construction counters? Their liabilities far far exceeded their profit...must check with other counters in same industry before i know any better. Cash flow even worse...so what if they earn 187% profit, their net cash flow is negative.

Haha, no way I'm investing in lian beng for long term...unpredictable business, cyclical industry, bad cash flow, poor balance sheet with high gearing :) haha, so why am I still in this counter? Speculation loh :P Anyway, 5 lots only...oh oh, they give dividend of 0.22 cts per share...works out to be around $2.20 per lot. If they are giving dividend, means they have no better use of their money? haha :) Not interested in their $11 (i have 5 lots)...maybe can make use of this to sell higher. I've rode this for some time already :)

Haha, got another news from lianbeng. This one is about selling 50% of lianbeng's stack in a jointly controlled entity (called lianbeng energy) to manhattan resources limited. After the proposed disposal of shares, Lian beng energy will become a wholly owned subsidiary of manhattan. Here's the juicy bit, the total consideration (or price that manhattan had to pay to lianbeng) is a nominal S$1, after taking into account the asset and liabilities of lian beng energy.

Long story short, manhattan buys over 50% of stack in lianbeng energy (jointly controlled by lianbeng group and manhattan). In return, manhattan offers to pay lian beng's group S$1, plus pay shareholder's loan of S$9,654,479.94.

Good news? or bad news?

SGX - damn solid company...suck off so much money from us...earn so much! But seriously their margins is very high (50%), with high growth in everything...maybe it's during bull phase, do so damn well..

I'll blog more next time...DAMN tired...

Portfolio okay lah, considering SGX kena whacked like mad. Total losses -$2.8k

Dow not cooperating again...-100 now. Europe all red, but the selling is much more mild compared to yesterday. Worry on monday, enjoy weekend first :P

Thursday, July 26, 2007

Ping Biang Pong?

Market not doing too well these days huh? It went down 54 points to close at 3580, below support level. Could see more selling tmr, unless we rebound...but judging from dow now (-110), might not be so possible. Add on the fact that tmr is official profit taking day, Friday :P

Dow dancing cha cha nowadays, go in front 1 step, go back 2 steps. Their subprime problem really creating a hoo haa over there during the already volatile earning seasons. But these kind of explanations are nonsense...if the market is up, they will say subprime not a concern as housing data shown signs of bottom...when market is down, they will say subprime concern lingers in the mind of investors. Everything also they say one, haha :)

But if you seriously think about it, what has subprime there got to do with us here? Will tmr see panic selling within the first 1 hour of market opening, selling everything from construction to marine to oil stocks? If you don't think it's related, there's nothing to be afraid of.

While I was eating dinner around 9 pm at the foodcourt, the auntie gave me a lot of rice and meat and vegetables, all for the same price. That's because they are closing down for the day already. I was thinking, hey, if I eat when others are not eating, I'm getting a bargain. If you've eaten reunion dinner outside at restaurants, you'll find the opposite happening. Firstly you get sucky service and lousier food, and to top it all off, you pay much much more. That's because you're eating when others want to eat too. Be a brave and confident contrarian, my friends.

I think I level 10 in emotional management already. Last last time, I'll be panicking and will be queuing now to sell my stocks first thing in the morning. Now I'm more optimistic when market is down...haha, can go shopping :) When market is all up, then I'll start to feel jittery about when the next correction will be. Pleasant change of mindset :)

I see all the stocks, left right up down, a lot of them had been around the bottom of RSI range. Construction stocks esp (maybe except lianbeng and CES), all are battered down. Wash out contra players? Nobody contra construction stocks when there's no news, it's not as if they rose a lot these days.

Today, one of the few green stocks in my watchlish, Swiber, made an announcement. JP morgan is buying more of swiber. Wonder what effect it'll have tomorrow. Highly dependent on Dow I guess, because broader market condition determines the market sentiment of STI, since we don't have backbone haha :)

The only stocks I'm worried about in my watchlist are CSC and China transcom. CSC had been battered down quite badly, I doubt if there's more selling...Support at 0.395 (ema50days). For china transcom, I bought because of TA, but because of the recent selling, not much TA to talk about. The only thing that prevents me from selling is that ema20 days is such a good support. Hold on first.

Anyway, tmr i'll be out from morning till night, no way I can check the market. Oh, so be it :)

Dow -100 now, Europe a BLOODY BLOODY RED SEA, FTSE (UK stock exchange) dropped 1.73%..most drop within 1-2% (average 1.5% roughly). Monday then worry lah :P

My kitten :)

Since market is down, look at something nice:

Here's my cat when she's a few months old :P So cuttteee!

Wednesday, July 25, 2007

Swiber won US$12 million contract

Didn't expect Dow to go -226 last night!

Dow is getting very volatile these few weeks. Is it because of earnings seasons? Do Dow fluctuate a lot during earnings seasons? How come I didn't notice this last few times? Hmm...

STI dropped straight in the morning, but I noticed that the selling is not broadbased. In fact, only a few STI component stocks are dropping. Overall my portfolio is fine, though slightly in the red (-$500). Construction stocks are still idling, except Chip eng seng, which broke out of resistance level and rallied the rest to a brief rally intraday. Of course, without concrete news or fresh rumors, it could only be a fake rally. I'm quite impressed with lian beng though :)

Just read sgx announcement that Chip Eng Seng (CES) won a contract...I thought it's IR...haha :) Luckily not, it's a S$39 million contract to build Singapore Safety driving centre at Admiralty road west. Supposed to last for 78 weeks (1 yr 6 mths). No wonder cheong like mad...

Was quite tempted to go into SPC warrants, because they are going to release their results today. But I didn't...warrants brought me to where I am, so no way I'm going to succumb again.

Just saw a happy news: SWIBER won a US$12 million LOI (letter of intent) for offshore installation works in M'sia. Project is expected to be completed by September this year. I'm happy with how swiber kept clinching contracts, it at least shows growth in the region that swiber had a foothold. I'll be even more happy if swiber clinches contracts (no matter how small) in new regions that it had opened office in, like Middle east and India. If it won contracts there, it shows that swiber had truly gained a sizable foothold in this area of providing offshore EPCIC business in the asia pacific region. Signs of strong economic moat.

These are the projects that swiber had secured this year:
- US$31 million offshore installation project in M'sia in June
- US$21 million offshore installation project in Indonesia in May
- US$146.4 million offshore installation project in Brunei in Feb

Adding together this US$12 million project in M'sia, total project in 2007 so far exceeded US$200 million. No wonder Swiber today had queer activities...price shot up to 3.420 before closing at 3.260 (+0.040). Looking forward for more positive news from this cosco wannabe :)

Straits resource, parent of straits asia resource gave this report today. Not sure what to make of it, because I can hardly understand it. Basically what I can gather is that the mines are not doing as well as it should be because of the rain. Supposedly next half of the year would be better, and that's dependent on how well the mines can recover from the rain. Sell or hold? hmm...

From the action today, doesn't look like good news...but I could be wrong. The price went from intraday high of 1.56 to a low of 1.47, before closing at 1.48. Let's see how it goes tmr. Supported by ema20 days now...if that fails, there's always $1.41 strong support.

Dow +44, europe mostly red.

Tuesday, July 24, 2007

STI broke new record, 3665

I saw from tvmobile that STI broke new records, closing 3665 with volume of 2.98 billion. I don't feel that the rally is broadbased. In fact, most of the stocks in my watchlist are down. SGX must be the only one that brings the whole of STI up, haha :) Pennies again hogged the top volume. Scary times huh?

I responded by selling off one of my stocks, CHoffshore. It ran up yesterday after breaking out of resistance and tried to break through 1.03 intra day high, but it can't and subsequently fell and close at 0.990. From the quotes, I can see strong resistance at 0.995 and 1.00 around 4pm and decided that I had a good run with this stock, it's time to take profit and let others take the risk. By selling CHoffshore, I had officially closed the most profitable trade in my investing life, amounting to a total of 46.76% (the most profitable one had not been closed...guess which one? Swiber of cos!)

Let's recall the events that led me to buy this stock.

I bought 5 lots at 0.665 on 10th May this year. The trading decision was based on Joshing's recommendation in his thread from cna forum. The reason for entry is based on bull flag theory. If upon breakout of 0.665 resistance, the possible minimum target is 0.785. I bought at 0.665 but the price didn't close above and subsequently went into consolidation for one and a half months.

Joshing cut off on that day or a few days after because it didn't breakout, but I held on. Stubbornness or just stupidity, I forgot which, haha :) On hindsight, the consolidation phase (or base building) is important to achieve the price CHoffshore is at now. The longer the consolidation phase, the tighter will be the bollinger band squeeze and the price changes after it breaks out of consolidation zone would be much more.

It finally reached target price of 0.785 on 21st June, where the target acted briefly as a resistance level. Good lessons to learn from this whole episode...hope I can recognize the circumstances of a good run-up again when I see one.

The reason for exiting the stock is not that I have no confidence on the fundamentals. I'm very confidence of the marine/offshore industry (Asl marine and labroy clinched S$100 million contracts for shipbuilding just today). If I did not lose 30k and made it back with lots of money as paper profit and not realised profit, I wouldn't have sold this. My primary concern now is not to make big bucks, but to secure the capital that I had lost first. Profit can wait. Hence, the decision to sell.

Construction stocks are still idling. With no fresh news on contracts win, the upside for them in the short run is very limited. Constructions are my next target to trim my portfolio and secure my lost capital, namely CSC. I'm holding too much stack in construction already.

Oh, chinatranscom too...once it reaches near my target price of 0.585, going to sell it off too. This one have very bad fundamentals. I bought it solely on TA and should sell it based on TA too. Today thought it will breakout, but still idling around breakout point. Shall wait...

Dow not doing too well tonight. Just now was around -100 but sort of rebounded back to -65 now. Shouldn't go back to -100 I think. Europe is all red.

(saw on tv mobile that china is going for another round of rate hikes....did i see it wrongly? didn't they just raised it by 0.27% last weekend? hmm...)

John Law and the Mississippi Bubble in 1720s

Another lesson to learn from the past. Though technically this is not a bubble, more like a failed monetary policy. Good to learn from anyway :)


In the early 18th century the economy of France was depressed. The government was deeply in debt and taxes were high. In addition, the French controlled the colony of Louisiana, a vast settlement in the interior of North America. The Louisiana Colony included the Natchez district and the area along the Mississippi Gulf Coast in present-day Mississippi. France was the first European country to settle this area of North America (1699-1763).

The American land was much larger than France and the French knew little about it. Many did not even know where it was. But many had heard the rumor that this land was rich in silver and gold, the French currency.

The depressed French economic environment was fertile ground for some of the monetary and economic ideas of John Law (1671 to 1729). Law was a Scottish financier born in Edinburgh. He was a colorful character who has been described as tall, handsome, and vain. He had a passion for women and gambling.

When Law came to France in 1714, he renewed his acquaintance with the nephew of King Louis XIV, the Duke of Orleans. The duke became Regent of France after the king's death in 1715. The regent served as ruler while the heir to the throne, 5-year-old Louis XV, was still a minor. The duke recalled Law's financial prowess and sought his advice and assistance in straightening out France's financial mess left over from years of reckless spending under Louis XIV.

This association with the Duke of Orleans would ensure Law's place in history. Not only would Law advance the use of paper money, the French word millionaire would come into use as a result of his most famous scheme — the Mississippi Company.

In 1716 Law convinced the French government to let him open a bank, the Bank Generale, that could issue paper money, or bank notes. The paper notes would be supported by the bank's assets of gold and silver and would circulate as a medium of exchange. Paper money was a new concept for the French; money to them was silver and gold. Law believed that paper notes would increase the money in circulation, which, in turn, would increase commerce. These conditions would help revitalize and rehabilitate the finances of the French government.

In August 1717, he organized the Compagnie d'Occident (Company of the West) to which the French government gave the control of trade between France and its Louisiana and Canadian colonies. In Canada, the French would trade in beaver skins. In the Louisiana colony they would trade in precious metals.

The colony stretched for 3,000 miles from the mouth of the Mississippi River to parts of Canada. It included the present-day states that hug the river: Louisiana, Mississippi, Arkansas, Missouri, Illinois, Iowa, Wisconsin, and Minnesota. The colony of Louisiana's connection to the Mississippi River gave rise to the company's more popular name, The Mississippi Company.

Law's company had exclusive trading privileges in the territory for 25 years; it could appoint its own governor and officers in the colony and make land grants to potential developers. In turn the company accepted the responsibility of transporting 6,000 settlers and 3,000 slaves to the colony before expiration of its charter.

The scheme to finance the initial operations of the Mississippi Company was simple. Law would raise the money by selling shares in the company for cash and, more importantly, for state bonds. Law accepted a low interest rate on the bonds which helped French finances while promising the company a more secure cash flow. Simply put, Law came up with a way to finance a big business scheme. The lure of gold and silver brought out many eager investors in the Mississippi Company.

Later Law would create cash flow from new economic activity. It turns out that the Mississippi Company was a small part of a much grander empire he was about to create. In September 1718 the company acquired the monopoly in tobacco trading with Africa. Law's Bank Generale was taken over by the French government in January 1719 and was renamed the Bank Royale. Law remained in charge, however, and the crown further guaranteed the bank's note issue. In May he obtained control of the companies trading with China and the East Indies. He renamed his entire business interest the Compagnie des Indes, but most people still called it the Mississippi Company. In effect, Law now controlled all trade with France and the rest of the world outside of Europe.

The company next purchased the right to mint new coins for France, and by October it had purchased the right to collect most French taxes. In January 1720, Law became the Controller General and Superintendent General of Finance. Law now controlled all of France's finance and money creation. He also controlled the company that handled all of France's foreign trade and colonial development. Furthermore, by holding much of the French government's debt, he had created a stable source of income for future business ventures. Law had created Europe's most successful conglomerate.

Law paid for these activities and privileges by issuing additional shares in the company. These shares could be paid for with bank notes (from his bank) or with government debt.

The value of shares in the Mississippi Company rose dramatically as Law's empire expanded. Investors from across France and Europe eagerly played in this new market. The financial district in Paris became so agitated at times with investors that soldiers would be sent in at night to maintain order. Shares in the Mississippi Company started at around 500 livres tournois (the French unit of account at the time) per share in January 1719. By December 1719, share prices had reached 10,000 livres, an increase of 190 percent in just under a year. The market became so seductive that people from the working class began investing whatever small sums they could scrape together. New millionaires were commonplace. (incidentally, the word millionaire comes from investors who struck it rich investing in Misssissippi company)

The weak spot in Law's scheme was his willingness to issue more bank notes to fund purchases of shares in the company. Stock prices began falling in January 1720 as some investors sold shares to turn capital gains into gold coin. To stop the sell-off, Law restricted any payment in gold that was more than 100 livres. The paper notes of the Bank Royale were made legal tender, which meant that they could be used to pay taxes and settle most debts. The company was trying to get people to accept the paper notes rather than gold. The bank subsequently promised to exchange its notes for shares in the company at the going market price of 10,000 livres. This attempt to turn stock shares into money resulted in a sudden doubling of the money supply in France. It is not surprising then that inflation started to take off. Inflation reached a monthly rate of 23 percent in January 1720.

Law devalued shares in the company in several stages during 1720, and the value of bank notes was reduced to 50 percent of their face value. By September 1720 the price of shares in the company had fallen to 2,000 livres and to 1,000 by December. The fall in the price of stock allowed Law's enemies to take control of the company by confiscating the shares of investors who could not prove they had actually paid for their shares with real assets rather than credit. This reduced investor shares, or shares outstanding, by two-thirds. By September 1721 share prices had dropped to 500 livres, where they had been at the beginning.

The rise and fall of the Mississippi Company became known as the Mississippi Bubble. Indeed, Law is most famous, or perhaps infamous, for his involvement in this prominent financial disaster. A “bubble” in the world of finance is a term applied to an unusually rapid increase in stock prices or the value of some other asset like real estate. The increase is then followed by an equally rapid collapse in prices. The wild fluctuations in prices are usually viewed as irrational and the product of uncontrolled speculation rather than sensible investment practices.

Economists are divided on how to interpret Law's scheme. Charles Kindleberger, an economic historian at Yale University, believes Law's intentions were legitimate and that the Mississippi Company was intended to be a real enterprise. Law's financial arrangements, however, were misguided. Others have noted that Law did help straighten out the convoluted system of French taxation and finance. And, the economist Peter Garber believes that Law's system had more potential than is often believed.

The story of John Law and the Mississippi Company is as intriguing as any modern financial disaster. In the end, many of the new millionaires were financially destroyed. So was France. It would be 80 years before France would again introduce paper money into its economy.

Jon Moen, Ph.D., is professor of business administration, School of Business Administration, University of Mississippi.

Posted October 2001

Monday, July 23, 2007

Expect the unexpected

Despite China's increase in interest rate and dow's bad performance last Fri, STI held up, along with the rest of the asian bourses. Shanghai, surprise surprise, managed to close 3.81% higher while its counterpart, HSI, closed up 0.32%. Nikkei however dropped 1.07%.

A strong recovery by STI throughout the day saved STI from a potential -30 to close just -16 pts at 3635, well above support levels. Volume is a rather small 3.7 billion. Property and banks are the usual ones to fall, with the top volume hogged by warrants and pennies.

Is the worst over? Hard to say. I'm optimistic when market selldown and pessimistic when it's we ran up. Since we're still in the midst of earnings seasons, I doubt any selldown will be longlasting and severe. But after national day, it's hard to say. I heard some rather bad macro news: Bank of england might be looking to increase interest rate by 0.25%, after china's increase of 0.27%. This might be closely followed by Japan after the election. With 3 major banks conspiring to bring world equity market down, we better get prepared for the worst.

Have you notice there's a surge of rights, bonds and placement shares recently? KS energy is the latest to join this crowd. Past companies include occulus & swiber (that's all i can remember). South sea bubble, anybody? Hmm...

Straits asia reported director's buying in shares from the open market. They also reported an increase in holdings by fidelity funds from 4.81% to 5.01%. While there are many reasons for directors and funds to sell off shares, there's only one reason why institutional and important stack holders like directors want to buy a company's shares -- they are bullish about it's prospect. Straits reached an intra day high of 1.57 before closing at 1.54.

Lian beng broke 52 weeks high after break out of resistance level at 0.540 (intraday high of 0.565) with high volume (82 million compared to 25 million average). Hope it can reached my flag target (26th June to 3rd July) of 0.585. Recently a lot of construction have what I called intraday rallies. It will shot up, bringing all the usual gang like yongnam, csc, koh bros, ces together, before closing a weaker towards market close. Highly speculative...people must be betting the next construction awards this week.

I'll be looking forward to reduce my holdings in construction when they announce.


Wow...made a very good run today. Broke out of breakout level for flag pole at 0.895, and ran up all the way to $1 before closing at 0.980 today (+0.115, up 13.3%). I've never see CHoffshore ran up so much before. Either the quarterly reports are fantastic or there's contracts announcement or upgrade in target price by brokerage firm. But I didn't see any. Yet.

My target price for this stock is $1.04. If all goes well, might see it tmr already. Cheong ah!

Dow is up 75 pts, europe mostly green.

Sunday, July 22, 2007

Update of portfolio

Just to update my holdings since I bought in another stock, China transcom last week.

1. Pac Andes holdings (ROI = 30%)
2. Swiber (ROI = 155%)
3. CSC holdings (ROI = 13%)
4. Yongnam (ROI = 26%)
5. Straits Asia resource (ROI = 33%)
6. CH offshore (ROI = 28%)
7. Lian Beng (ROI = 45%)
8. China transcom (ROI = -6%)

Slightly in the red for my portfolio, -$450 as of last Fri.

Prepared for Monday?

Hey hey, I got the confirmation from CDP that I was allocated 5 lots of pac andes shares (4 allocated and guaranteed plus 1 excess lot). It also said that any refunds of funds not used will be done latest by 24th July. When I checked my bank accounts, I found that it had already been refunded to me on 20th July, the same day that the pac andes rights shares are traded.

That wraps up the whole episode of the pac andes rights exercise. Actually it was a good experience because now I know what to expect and go about applying for rights shares when I encountered it next time. Good reference material :)

Dow hit resistance at 14,000 and retrace back. Initially the drop was quite drastic, around -200 points (google and caterpillar missed earnings expectations). But later, it rebounded back to around -150 to close at 13,851. This might have some effect on STI's opening tmr. Oh, not to forget China interest rate hike...hmm, bargain hunt? haha

I've heard that besides china, bank of england is also looking to increase rate by 0.25% to curb money supply and cool inflation (as soon as next month). Of course, there is bank of japan. Wow...strong macro forces at work here...might just trigger off some major selldown. Take heed.

China transcom

Not sure what to make of this. Charts still look okay to be, despite the selldown. Support at 0.485 and resistance at 0.545. Might look to cut if it falls below 0.485. If resistance at 0.545 is exceeded, might reach my flag target of 0.645. Given the bad sentiment, not much chance of it reaching soon. Keep in view.

Construction stocks might take another beating again tmr. But after last wed's selloff, most are still bruising...hard to say what might happen.

Take a step at a time :) Have a great week ahead!

Friday, July 20, 2007

What a week...cheong down cheong up

STI basically reversed all the losses done on Wed by panic selling upon hearing the development charges increment from 50% to 70%. It rose up 46 pts to close at 3651, up 1.30%.

A good lesson to learn from this. Wed is definitely panic selling. What had development charges had to do with other stocks? Why are the mass selling of counters ranging from marine, commodities which had nothing to do with the increment in charges? Wed poised a good opportunity to take advantage of the fire sale of stocks. Most of the stocks already rebounded back to or near their former height as if wed didn't happen. For those that didn't, it's a great opportunity to wash out weak holders and change hands to investors who have a longer holding period.

If next time this happens, will we panic again? Or will we calmly analyse the situation and remove the fear and act in contrary to what the herd is doing....buy at a huge discount? It's always good not to over invest to prepare oneself for situations like this. Don't worry, it's sure as day follows night, this type of panic selling would happen again and again.

Constructions stocks had quite a day today. Lianbeng beat all the rest to close at 0.520 (up 9.5%), even beating all time leader yongnam (close at 0.500). CSC still sleeping, but at least the charts look damn swee for a nice rebound after hitting ema50 days. I'll be monitoring CSC closely, wanted to sell off some holdings.....holding too much money in construction stocks already.

Swiber closed quite good, up 0.100 to close at 3.320. They announced that they are establishing a S$300 million multicurrency medium term note programme to leverage itself so as to capitalise on the booming marine offshore sector. Notes is a medium term debt instrument to raise money. Bad thing is that they have to pay interest for the bond holders....esp bad in recession. As investors, we have to balance whether the amount of capital raised from the bond is good enough to generate enough returns to make interest payment to bondholders as well as to get a decent profit.

The money is used firstly to increase the fleet of vessels for its offshore marine support, services and engineering, procurement, construction, installation and commissioning projects (EPCIC). Personally don't like the idea of a highly geared company, no matter how good the growth prospects seems like now. Recession is almost looming a step behind...hmm...have to monitor and see. Hope musicwhiz can shed some light on this after he comes back from business trip, would like to hear his views on this.

Dow didn't manage to close above 14,000 while trying for 2 days...since it cannot go up, it will come down. That's exactly what Dow is doing. Dow is currently at -112 now, europe almost all red. The double whammy would occur if during the weekend, China announced increase in interest rates or such policy.....market will cheong down again.

We'll worry about that when it comes :)

My portfolio goes back to losses because of Wed's selling. Now -$450 in the red. I'll post charts on sunday eve/night again and write down my action plan. Going to be extremely busy the next few months till October....thinking of selling my speculative stocks to trim my portfolio.

I got 1 excess pac andes share!!

Haha, today I logged into CDP to check if my Pac andes rights had been allocated to my account.

I am supposed to have 8 lots of pac andes shares in CDP, because initially before the rights issue, I had 4 lots. After the 1-1 rights exercise, I should get just 8 lots. However, I applied for 6 excess rights because the price for the rights share is at a huge discount to closing - $0.52 compared to yesterday's close of 0.895 (42% discount!!). It's almost like buying $1 for 58 cts!

I'm pleasantly surprised to see that in my CDP account, I have 9 lots of pac andes!! Haha, that means out of 6 excess rights that I applied, I kena 1 :) Taking into account that the excess rights had been oversubscribed around 20%, I think I'm quite lucky :) I've applied for so many IPO...yangzhijiang, fabchem, sino-env....never even kena one before!

Must be my visualising at work...haha! I was thinking a few days ago that at least must get 1-2 excess rights, then I really got 1!

But today pac andes undergo some selling. The transactions are very funny, take a look:

It's like so systematic and so orderly. Earlier in the morning also very funny, it's 1 - 2 lots selldown. Usually the orders don't come so nicely one...it's sometimes 3 lots, sometimes 12 lots, sometimes 25 and so on...but this is really funny. First time that I see such movements.

I wonder what to make of it?

STI doing quite well at this point in time: +44 now, way off ema20 days. Might even be testing resistance later. What I'm afraid is policy changes over at China again. Saw their growth rates hit 11 plus %...sure have some tightening here and there, might cause some reactionary sell off in HSI and shanghai and spill over to here.

Constructions seem to rev up today :) To rally it, let's shout: CONSTRUCTICONS TRANSFORM AND RALLY! haha :)

Thursday, July 19, 2007

South Sea Bubble

Market crash story 2

Happens in 1700s in England. Haha, another lesson to learn from the past. Don't ever say that this time the market is different...human psychology is always the same and hence the market will always be the same.

Read and learn :)

Dubbed the “Enron of England”, the South Sea Bubble was one of history’s worst financial bubbles.

The mania started in 1711, after a war which left Britain in debt by 10 million pounds. Britain proposed a deal to a financial institution, the South Sea Company, where Britain’s debt would be financed in return for 6% interest. Britain added another benefit to sweeten the deal: exclusive trading rights in the South Seas. The South Sea Company quickly agreed, because of the proximity to wealthy South American colonies. The company planned on developing a monopoly in the slave trade. Additionally it was thought that the Mexicans and South Americans would eagerly trade their gold and jewels for the wool and fleece clothing of the British.

The South Sea Company issued stock to finance operations and gain investors. Investors quickly saw what they perceived as value in the monopoly of the South Seas. Shares were quickly snatched up from the start. The South Sea Company, seeing the success of the first issue of shares, quickly issued even more. This stock was rapidly consumed by the voracious appetite of the investors. Investors had no quibble, despite having a highly inexperienced management team. All they saw was that the stock was going to the stratosphere. Many investors were enamored by the lavish corporate offices that had been set up. This painted an image of success and wealth in the eyes of shareholders. At this point in England’s inudstrial revolution, investment capital was plentiful. It became extremely fashionable to own South Sea Company shares.

The management team of this company started hyping the stock, spouting illusions of grandeur to the investors. Speculation became rampant as the share price kept skyrocketing. It was thought that this company “could never fail”. The management developed rumors that the South Sea Company had been granted full use of Latin American ports, by Spain. The truth was, however, that Spain only allowed 3 ships per year. Unrealistic expectations were the norm among South Sea’s investors and speculators.

Much like Enron, widespread corruption occurred among directors, company officials and their political friends. Ipo’s started everywhere as other companies tried to profit from the stock boom, as well. These companies proclaimed everything from building floating mansions to distilling sunshine from vegetables. These shares were snatched up by speculators as well. Many people became aristocracy almost overnight. Sir Isaac Newton, the scientist, had foreseen a coming stock market crash and sold his shares early with a profit of 7,000 pounds. Aftwerwards, however, Newton saw the bubble keep inflating and bought more shares.

In 1718, Britain and Spain went to war again, stopping all chances for trade. Investors were not daunted, as they kept buying. Investors from other European countries started frantically scrambling for South Sea’s shares, as well.At this point the company leaders realized that the South Sea Company wasn’t generating any profit from its operations. More emphasis was placed on making money from issuing stock than from actual commerce. For example, large shipments of wool were left to decay as a result of careless shipping mistakes. It was at this point that management realized that the shares were incredibly overvalued relative to the profits. They decided to sell while other investors were still unaware that the company was profitless.

Eventually word broke out that the management team had sold out completely. Investors were left holding the bag. Panic selling of the worthless shares immediately ensued. Fortunes were lost in a heartbeat. The stock market crash had started and all other stocks prices were obliterated, as well. Isaac Newton lost over 20,000 pounds of his fortune. As a result of this crisis, he stated “I can calculate the motions of heavenly bodies, but not the madness of people”. Jonathan Swift, who also lost a fortune, was inspired to write Gulliver’s Travels, which is a satire about British society. The British government avoided a banking crisis due to its standing as the financial powerhouse of the world. The government worked to stabilize the banking industry. The issuing of shares was outlawed to prevent any future bubbles. This law was in effect until 1825. Despite all of the efforts of the government, Britain’s economy was in shambles. The economy didn’t fully recover until one century later. Several generations were adversely affected by the stock market crash. The corporate management con artists fled to other countries with their fortunes.

Every bubble and market crash has the same important elements. Greed and unrealistic expectations will continue to foul people’s judgment as it always has.

Dead cat rebound? Or genuine?

STI managed pretty well today, closing +20, with an okay volume of 4.5 billion shares transacted. Dow didn't do too badly last night (-53), so I guess that helps a lot. We are pulled up by Nikkei strong start and later by HSI too.

Is the worst over? hmm, a little early to say. At most I can say is that the support at ema20 days holds, so that itself is a good sign. Let's see how tmr closes to get a feel of the strength. I guess much depends on Dow showing tonight and whether China suddenly throw in some policy tightening during weekends after the data came out today.

Most of the stocks rebounded today. Construction stocks had major buy in...stocks like yongnam (+7.4%), lianbeng (+8%) and CSC (+3.8%) all rallied strongly. Surprise surprise - China transcom went back from 0.475 to 0.510 today :) Haha, still got chance ah? Let's see if it can break out of 0.54 resistance and it can cheong ah!

Straits asia cheong today too, closing up 0.020 to close at 1.440 (intraday high of 1.45). A report from ang moh brokerage house, UBS, must be the trigger for this rise. UBS raised the target price of straits asia to $1.72 from $1.55, citing strong china imports, slowing exports (and rising demand) from indonesia, as well as resilient demand from india, japan and korea.

Support at 1.41 held steady. Indicators all pointing to upside more than downside. Should see some action within 2 weeks, either break out of downtrend line or break down of support line. I'll bet for the former :)

Yesterday lost around 4k. Today recovered half, not bad not bad :) My heart goes out to those who lost a lot. Heard that 777777777 from cna lost a year of salary from just the market drop yesterday...ouch... Hope everyone is fine :)

Dow +60, Europe all green :)

Wednesday, July 18, 2007

STI diarrhoea

Thks for a couple of well meaning friends who sms-ed me when I was away to warn me of the panic selling occurring around 4 pm. I kind of expected STI to correct significantly because of the bearish rising wedge observed. What I didn't expect is the trigger of it.

The Ministry of national development had announced that development charge rates will be revised from the current 50% to 70%. This is done so as to cool down the fervent en block collective sales and to slow down the increase in rentals. MM Lee had earlier warned this montht that rising property prices and rents have to be kept in check to help singapore maintain its competitive edge. Bad news for developers man...

One first thought goes to noob...hope you're okay with your warrants.

STI isn't likely to find support at ema20 days. I think it's more possible for us to drop another 60 pts before support at 3525 break the fall. 3525 coincides closely with fibo retracement 23.6%.

More worrying for me is now what is happening locally. US Bear stearns fund collapsed, and investors might not get much value out of it. Together with Ben speaking tonight, US might not do so well. China side -- speculation is swirling that china's macroeconomic data, expected to be out on thurs, could show a spike in June inflation, and that might cause another round of policy tightening. Almost a perfect storm.

All the construction counters I'm holding are holding at ema50 days. Hope that it would hold there, otherwise more selling would ensure. Genting...drop to 90 cts already, might want to get it. But seriously, I'm more interested in cosco, swiber ;)

I'll still be holding, not selling. If anything, I should be buying now. See how STI perform tmr and Fri. I seriously think there's no big deal about the development charges increment, unless you're holding a property counter. How other stocks undergo such major selling can only be attributed to one thing : panic. Take advantage of it lah :)

Not going to be monitoring on thurs and fri because of work, hope everything will be fine :) My losses went back to 4k, ok lah, not worried. Hhaha, hope cosco drop drop drop for me to pick up. 5 lots also good right? :)

Dow -50, europe mostly red.

Tulip bulb mania of 1630s

Thought this was a very interesting fact about the dangers of speculation. Human psychology is always the same :) Last time is trading flowers....now is trading electronic bits and bytes, called 'stocks'.


Could a mere tulip bulb be worth $76,000? It is if people are willing to pay for it! It may sound preposterous, but this is exactly what happened in Holland in the 1630’s.

The seeds of this craze were planted in 1593. A man by the name of Conrad Guestner imported the first tulip bulb into Holland from Constantinople, in present day Turkey. After a few years, tulip bulbs became a status symbol and a novelty for the rich and famous. Eventually, tulip bulbs became a hot ticket item in neighboring Germany, as well. After some time, a few tulip bulbs contracted a non-harmful plant virus called mosaic. The effects of this mosaic virus were tulip petals with beautiful “flames” of color. This unique effect furthermore increased the value of the already rare and highly exclusive tulip bulb.

Initially, only the true connoisseurs bought tulip bulbs, but the rapidly rising price quickly attracted speculators looking to profit. It didn’t take long before the tulip bulbs were traded on local market exchanges, which were not unlike today’s stock exchanges. By 1634, tulip mania had feverishly spread to the Dutch middle class. Pretty soon everybody was dealing in tulip bulbs, looking to make a quick fortune. The majority of the tulip bulb buyers had no intentions of even planting these bulbs! The name of the game was to buy low and sell high, just like in any other market. The whole Dutch nation was caught in a sweeping mania, as people traded in their land, livestock, farms and life savings all to acquire 1 single tulip bulb!

In less than one month, the price of tulip bulbs went up twenty-fold! To put that into perspective, if you had invested $1,000 and came back on month later, your investment would have ballooned to $20,000! Now you can understand the mad rush to buy tulip bulbs at any cost. Tulip bulb mania affected the public psyche to an extreme. One drunk man in a bar started peeling and eating what he thought was an onion, while it was in fact it was the bar owner's tulip bulb on display. This man was jailed for many months!

All common sense and logic was thrown to the wind, and even scoffed at. This is exemplified by how many USEFUL items it cost to buy 1 single tulip bulb:

• four tons of wheat
• eight tons of rye
• one bed
• four oxen
• eight pigs
• 12 sheep
• one suit of clothes
• two casks of wine
• four tons of beer
• two tons of butter
• 1,000 pounds of cheese
• one silver drinking cup.

Mind you, these valuable items COMBINED only equaled the value of 1 tulip bulb! The modern day value of these items is over $40,000!

In 1636, tulips were trading hands on the Amsterdam stock exchange as well as on exchanges in Rotterdam, Harlem, Levytown, Horne and many other exchanges in other nearby European countries. These exchanges started to offer option contracts to speculators. These option contracts allowed tulip bulbs to be speculated upon for a fraction of the price of a real tulip bulb. This allowed people of lower means to speculate in the tulip market. Additionally, options allowed for leverage. Due to leverage, option buyers were able to control larger amounts of tulip bulbs, allowing a greater profit. In a previous example, we showed how a $1,000 dollar investment would have yielded $20,000 in one month. As if this weren’t enough, option leverage allowed this same investment of $1,000 to balloon into $100,000! Unfortunately, leverage is a double-edged sword. If the tulip bulb price moved downwards ever so slightly, the option buyer’s investment would be lost and they might even owe money! Talk about risky. But at this point, it was commonly believed that the tulip market was immune to crashing and that it would “always go up”.

After some time, the Dutch government started to develop regulation to help control the tulip craze. It was at this point that a few informed speculators started liquidating their tulips bulbs and contracts. It was these people, or the smart money, that secured large profits that were now in the form of cold hard cash. In addition, more tulip bulbs were added to the supply due to people harvesting new tulip bulbs. Suddenly tulip bulbs weren’t as quite as rare as before. The tulip market began a slight down trend, but shortly after started to plummet much faster than prices went up. Suddenly the market began a widespread panic when everyone started realizing that tulips were not worth the prices people were paying for them. In less than 6 weeks, tulip prices crashed by over 90%. Fortunes were lost. Wealthy became paupers. Bankruptcies were everywhere due to the negative side of option leverage. People that traded in farms and live savings for a tulip bulb were left holding a worthless plant seed. Many defaults occurred, where speculators couldn’t pay off their debts.

The Dutch government avoided intervening, only to advise tulip speculators and owners to form a council to attempt to stabilize prices and mend public confidence. Every one of these plans failed miserably, as tulip prices plummeted even lower than before.

Assembled deputies of Amsterdam nullified all of the contracts purchased at the height of the mania. The supreme judges of Amsterdam declared all tulip speculation to be gambling, and refused to honor these contracts. As a result, payments were not enforced by any of Holland’s courts. This further fueled the market crash.

The financial devastation that followed the tulip bulb crash lasted for decades, crippling Dutch commerce. The price of tulips at the height of the mania was $76,000; 6 weeks later they were valued at less than one dollar! The only people who prospered from the insanity were the smart money who liquidated at the top.

In market manias, the investors are acting irrationally. Excessive greed causes people to feel financially invincible and make decisions that cause financial devastation. This process occurs regardless of if the market is a commodity market or a paper market like stocks. The moral is clear; the only way to survive is to be the smart money.

Tuesday, July 17, 2007

STI distributing?

Bad sign for STI?

I hate it when I see that STI opens up high in the morning and close neutral or slightly negative, with higher volume than previous day. Along with the fact that pennies hog the top 10 volume stocklist, it's a sure sign of distribution. Today's volume far exceeded yesterday's, at 6.4 billion. I think as long as I keep clear of STI index component, should be fine.

Glad to read the announcement that Pac andes rights shares had been oversubscribed by 20 odd percent. Chances of me getting excess rights is quite low I guess, and can still hope right? haha :) Just received their thick annual report, going to browse through it together with CSC one (haha, haven't even touch it, so busy these days..)

The rights shares are going to start trading next Monday. That means by this week I should get confirmation of how much excess rights I was allocated. Hope can get at least 2, haha :)

Wilmar going into aircraft business? haha, is this the reason why it broke new high today? Funny..they are into commodities (palm oil) business, how come suddenly go into joint venture to lease aircraft for commercial travellers within PRC? Don't know how shareholders would react to this interesting news of their business diversification.

Today kena whacked hard by construction stocks downturn. CSC dropped 0.010, Yongnam dropped to 0.505 before rebounding to close -0.005, lianbeng also dropped 0.010. Ok lah, at least now we can let price retrace, then we can prepare for a fantastic showdown next 2 weeks! Haha, highly optimistic? :)

CSC wake up!!! Sleep until touch ema20 days already ok?!

Bought China transcom at 0.515 (5 lots) today. Maybe it's really not an ascending triangle after all because the volume didn't not decline during the formation. I'll do an analysis this weekend after we confirm that's the triangle is not valid. Valid or not, the chart still looks good. Touching ema20 days now, might see a rebound tmr. Ema20 days is quite a good support, looking at the history. If it breaks below ema50, I'll get worried. As of now, just sit back and see how the action unfolds :)

Been actively reading up on how to read financial statements recently. Interesting!! Maybe next time I can intro the book I'm reading, very easy to understand :)

Dow +48, europe mostly red.

China transcom

Great stock recommended by Decipher today (17 July entry)

China transcom

Purely TA play, no idea at all about its FA. Company deals with telecomms products in china. 3G play? haha!

I like the ascending triangle (actually not sure if it's valid because the volume doesn't go lower) which tested the horizontal resistance line 0.54 thrice. The ascending triangle is also the base forming region of the flag formation. Last time I saw this kind of pattern was over at Cosco when I recommended last time. Cheong from $4 to $5 within a week (or less). Not going to let go of this opportunitiy, so I seized it.

I entered near bottom trendline at 0.515, 5 lots. Target price 0.67 based on flag (somewhat the same for ascending too). Might not have to wait long I think, because the converging pt of the triangle is near. My guess is by this week, it'll either breakout of 0.54 and cheong to my target region, or breakdown.

Monday, July 16, 2007

The secret

Market didn't do pretty well today. Higher volume than last fri, open high in the morning (+30) but close slightly negative (-1.38). Today Japan had a public holiday (marine day or something), and they also had a massive earthquake. Hope people there are doing well, my thoughts goes out to them.

Portfolio went to red today because most of my holdings isn't doing too well. Swiber went down, construction stocks went down too. Pac andes one of my stocks that didn't go down. I suppose it's the fact that they are giving dividend (0.54 cts per share), book closing on 8th Aug.

I'm not worried at all. A little correction here and there would tame the bull, so we can go up higher!

Been very busy with my work lately, which occupies me more and more. Since today there's really nothing to talk about, would like to share this secret of getting anything you want.

Through some coincidences, I came to learn of this method of visualising your goals AS THOUGH you've already attained it. This sets a very powerful signal to the universe and sends whatever you want to be attracted to you. The method can be found from the book called "The Secret"

Okay, it's similar to Antony robbin's unleash the giant within you that kind of motivational books, but put it a very simplified and elegant language that can be easily assimilated. Have to try it to believe.

Simply put, the main idea is that Whatever you think will come true. Have you tried visualizing about having seats in mac when it is crowded, then in the next instant, someone gets up and you get the seats? Or you think hard about the bus cos you're running late, and when you reach the bus stop the bus just came in time? Well, that's the power of visualizing.

(Above examples are real for me. The bus thingy happens twice in a day when I imagined strongly that the next bus will be the bus I want to take. That day, I didn't wait for buses at all. The mac incident is actually at MOS burger. Wanted to get a seat but it's all crowded. I visualised that I will get a seat and went to buy first so that I CAN SEAT down to eat later. The next instant, someone gets up. I'm very busy these days because out of the blue, I get a lot of work after visualizing my monthly income and thinking what to do with my income.)

I'm not selling anything lah, just thought of sharing this method of self-hypnotism to everyone. If you're remotely interested, just go to any major bookstore and flip through the book. If you want to get it, get it from online bookstore is cheaper.

Ask, believe and you shall get it :)

Weekly thoughts

Had a fantastic last week! My loses was erased the 2nd time in my trading life. I hope that it the last of it all!

Dow closed 45 pts to close at another record high again. Should see STI following suit too, I hope. On the whole, STI doesn't look too good.

I spotted the dreaded bearish ascending triangle formation again, accompanied by decreasing volume. If it breaks the downtrend line, we would go for yet another major retracement. On medium term, STI looks like channel trending between the nearly parallel lines. As we are now officially on earning seasons, that should provide some support for STI. Even if it drops, shouldn't be across the board. I'll keep clear of STI index components...risky.

I posted an entry saying since 1985, average monthly returns for STI in August is negative. In fact, August is one of the worst performing months. Not surprising since earnings seasons would have been over and there's no fresh leads to attract the bulls. Just be cautious as we near month end of July.

Straits asia

Ema 20 days support seems strong. Horizontal support level at 1.41 holds well. Seems poised for upside. I hope to see the downtrend line broken around 1.53, that should stem the downtrend. Flag target 1.80 upon breakout at 1.56 level with high volume.

Action: wait for breakout at 1.56!! Not waiting to enter at this moment.
Tp: 1.80
Trigger: No identifiable trigger yet. Perhaps upcoming results with good outlooks by management regarding coal reserves?


CSC price pattern looks quite predictable and nice.

Always forms a base after surging. When base forming, volume drops below average and surge up above average when breakout of consolidation phase. This is exactly what happens now. CSC is now in consolidation phase with the accompanied low volume. Stochastics and MACD supports a possible breakout. Flag target of minimum 0.540 achievable if breakout at 0.470 with high volume. The force is strong with this one...

Action: Look out for breakout at 0.470. Ready to sell 10-15 lots upon breakout to new height - need to reduce exposure to stocks to protect capital
Tp: 0.540
Support level: 0.420
Trigger: Could be IR contracts? haha, i wish!

Okay lah, late into the night already, later SWIBER CHEONG AH! CONSTRUCTICONS CHEONG AH! ahaha, shout loud loud :)

Thks for visiting my blog guys! It had broken 3000 mark already! I didn't expect the number of visitors to increase from 2000 to 3000 so fast :) I stil remember those days where there are only 12-15 people per day, but now i'm like getting at least 30 per day. Thks for all your support!

Sunday, July 15, 2007

You got aim BBR?

I sold off yellow pages already, trimmed down my portfolio a little. Here's my current portfolio:

1. Pac Andes holdings (ROI = 33%)
2. Swiber (ROI = 157%)
3. CSC holdings (ROI = 21%)
4. Yongnam (ROI = 33%)
5. Straits Asia resource (ROI = 29%)
6. CH offshore (ROI = 33%)
7. Lian Beng (ROI = 47%)

Last time I mentioned cosco with minimum tp of 4.50. It ended cheonging so much to hit above $5. Last close was $4.90, way above my target price. Haha, quite happy that my chart reading and price objective is quite accurate.

This week hot stock could be BBR.

Weekly charts:

After a nice run up last year, the price undergo consolidation within 2 trendlines for around 6 months. Initially I thought it's a bullish ascending triangle, but it didn't look like it based on the volume (volume should decrease when the triangle is being formed, this actually increases).

Flag formation sighted, with target price of $0.27 minimum, provided breakout at 0.19 is cleared with strong volume (greater than 96 million). Based on weekly, doesn't look like it's going to rally. In fact, I see conflicting signals. As price goes up, volume increases and MACD crossed over, but RSI drops and stochastics seems to turn downwards. Let's look at daily charts to resolve the conflicting signals.

Daily charts

Daily charts look better. I like the fact that there is positive price divergence for the different indicators. As price goes down, MACD, RSI and stochastics actually trend up, indicating that uptrend should be coming. The price entry also looks clearer. First is at 0.17 (ema50days and 61.8% fibo). Another is at 0.160 (ema50 days and 38.2% fibo).


Price target: 0.27 upon breakout of 0.19 level with strong volume

Entry pt: 0.170 or 0.160 (for safer entry, risk is price might not reach this low and miss the breakout). Can buy upon breakout at 0.19 too (risk is breakout might end up in failure and therefore caught in high)

Breakout trigger: Rumors of potential land acquisition for property development. Totally unsubstantiated with evidence, could be a red herring. Do your due diligence.

Friday, July 13, 2007

Dow +280 pts last night --- all time high

Quite tired tonight, so this would be a short one.

Dow broke resistance and closed at all time high last night, quite shocked to see it rallied up 280 plus points. I though the rally would cause STI to cheong, but the buying didn't impress me much. It opened up high but steadily decreases throughout the day. Most of my counters rose up in the morning but dropped neutral or slightly positive. Volume for STI was 4.1 billion, slightly more than yesterday.

Could be Friday, so profit taking on hot counters are usual. Yongnam fell 0.015 to close at 0.530. Goldman sachs issued a downgrade on yongnam from buy to neutral, citing its overvalued price while fundamentals remain unchanged. Target price was lifted from 0.46 to 0.54 though. Below is the news extract:

0133 GMT [Dow Jones] STOCK CALL: Goldman Sachs downgrades Yongnam Holdings (Y02.SG) to Neutral from Buy, removes from Asia Pacific Buy List; considers stock to be fairly valued at current levels though share price strength likely to continue next few months against backdrop of buoyant demand in overall sector and expected contract announcements. Lifts target to S$0.54 from S$0.46; says downgrade on valuation grounds as solid fundamentals unchanged. Stock flat at S$0.545 in heavy volume.(JEM)

In the morning, swiber really rallied up to intraday high of 3.520 but closed weaker at 3.34, otherwise I really huat! Good for price to consolidate a while and let more people jump into this powerhouse, so the price would rise even more.

Construction stocks all like want to die like that, haha :) But it's okay lah, just ride the wave, if things go wrong, I'll take profit and run first.

I'll do a more detailed defense lines for my counters on sunday, together with more action plan next week. Since I sold yellow page, I felt much happier cos my portfolio is trimmed. Look forward to more selling next week.

My portfolio is now in the green :) Thanks for all the wellwishers, I appreciate that! Quite happy to announce that my profits are now a small but healthy $870 :) Hope no more big losses to come! Have a great weekend ahead :)

Dow +36, europe only 1 red.

Thursday, July 12, 2007

Swiber India :)

Trades done today:
Sold my entire 1 lot of Yellow page at 1.38
(ROI = -20.3%, ROI with dividend = -15.6%)

Do not believe in the business. Bought for wrong reasons (based on brokerage report), should have cut losses but didn't. Been a year and it still haven't reached the price I had paid (1.67). I'll rather put in other stocks (though the dividend yield is quite good).

STI did pretty well today, rose up 30 pts to close at 3625. Volume was slightly higher than the previous day, with 502 gainers compared to 330 losers. A glance across the board, it looks like a broadbased rally where big caps and pennies cheong. This was after Dow's good performance yesterday's night, closing at 70 plus points.

Bank of Japan kept interest rates unchanged, so it causes nikkei to be jitterish. Market don't like uncertainty, if everything is settled, it will move on from there. Nikkei seems to be the only bourse that dropped, at this moment. Europe and the rest of the major markets are green. The thing we have to look out for is yen carry trade. Not sure if it can affect STI (as dkk mentioned). Just be cautious.

Swiber announced the incorporation of a wholly owned subsidiary in India. Now listen to this: Swiber India will act as a platform from which the group can tap on business opportunities in the fast growing India and middle east asia region. I absolutely like the expansionist management of Swiber, always looking for opportunities to expand into untapped regions. It has presence in Indonesia, Singapore, Brunei, Malaysia, Thailand, China, Austrialia, UK and US. I'll definitely be looking out for more contracts in new untapped regions. Really well poised to tap this hot industry.

Could that be the reason for Swiber's continued rally? Been rallying nonstop for 5 consecutive days already. With this new announcement, might even rallying tmr, despite the usual profit taking on Fri. Swiber is catching up with Cosco...the ultimate mad powerhouse.

Just learnt that JP morgan increased their stake of swiber from 2.46% to 4.80%...wow..BB are in :)

Haha, yongnam really behaved as I expected! Profit taking all the way from 9 am. Can see it briefly shoot up to 0.565 but the selling pressure is too great. It's better like that, wash out all the weaker holders. As I told some here, I'm planning to take profit on CSC. It's not that I don't believe in it anymore, it's just that I'm overly exposed to construction stocks. Since it's a speculative type of stocks...I do just that - speculate and sell on news.

I'll think more about my exit strategy over the weekends, don't like to think intra-week.

Lianbeng catching up with yongnam...haha! Breakout of resistance level at 0.515 and closed today at 0.53 (intraday high of 0.54). My target is 0.585 (based on flag) so I'll let it ride.

Pac andes

Pac andes going up and down within the two trendlines. Doesn't look like triangle formation because volume didn't decrease. Even if it is (depending on how you see it), it's a symmetrical triangle with no bullish or bearish bias.

If you ask me, I think the chances of going up is higher. Ema 50 days is a good moving support line for pac andes, so I don't think it'll drop below the blue line (discount whipsaw reaction). Resistance level at 0.935 (61.8% fibo) and 1.01 (23.6% fibo). I hope to see it clear above ema20 days, then take out resistance at 0.935.

Based on weekly chart, tp for pac andes is $1.18. That is provided it broke out of $1 (my breakout level based on weekly charts). Personally I think once the rights issue are settled (around 2 weeks from now), it should go up. Why do I say that? I wanted to buy the mother share, but I also subscribed for my allocated rights and excess rights. Since the result of my application is not known yet, I don't want to commit by buying more on the open market now. That kind of thinking explains the phase that pac andes is undergoing...not up not down.

Pac andes is not a contra stock...it's long term. So, let's see how this turns out. Severely underplayed in my opinion. Can look at these brokerage reports. Note that the target price is pre-rights. To convert the pre rights price to post rights, just apply the formula:

(Price + 0.52)/2

Oh, haven't even talked about dividends. Coming right up after the rights issue is settled. Proposed dividend is 0.54 cts per shares (post rights), that means $5.40 per post rights lot. Hope those holding pac andes feeling more confident? haha

Dow doing very well +130, europe a sea of green!

My investing journey

Got a happy announcement to make: I've erased my losses!!

At this moment, not only have I erased my losses, I'm sitting on $860 profits (fluctuates between 500 to 1000, see how it closes today). It had been one hell of a ride.

If you've been following my blog since I started around dec 06, you would have seen my trials and tribulations and how I've grown to give crappy analysis (I cringed when I look at my older postings) to a more proper one now (complete with target price, support and resistance level, formations). I've learnt a lot a lot of things, much more when I lost money than when I gained. Friends surrounding me gave me the inspiration and support when I needed the most help, especially during the trying period from Jan to April, where I see my start of year portfolio going from + 3.5 k to -30 k.

Must thank a few impt people first (bear my oscar speech, haha):

For never giving up on me even when I'm at the most down period of my life. Lesser person would have told me to give up on investing/trading, but you didn't. Thks for believing in me when sometimes I don't believe in myself anymore. You're like a beacon of light in a dark place.

Thks for introducing me about value investing. Reading the "Intelligent investor" changed my trading instincts and made me think hard about my past mistakes. After reading up upon your introduction to me about value investing, I blogged one of the most important entries in this entire blog, truly one that made me reflect upon my mistakes. This entry, made me realise how much I've lost out by focusing on short term gains and neglecting the bigger picture. Never looked back since.

KT and WB:
I still remember the two of you sms/called/msn me during after I posted this entry. Made me realised my wealth in the form of friends. I still remembered WB telling me to focus on what I have instead of what I had lost...very true.

Not to forget Decipher, who is my constant source of inspiration. By following closely the steps he made to bring his portfolio from -50% to more than 100%, I aim to do the same thing too. LS, for "sort of" pushing me to Decipher's TA course (I'm not interested at first), but it made me do more practice on TA, on a daily basis, until I'm no longer overwhelmed by it.

I'm even more humbled by the stock market than ever. Last year in 2006, when I first started, I made losses to the tune of 18k. My mistake? I knew nothing about TA or FA, basically just went in with brokerage report. I followed them religiously, thinking that if experts gave a target price, they should do a better job than me. How wrong was I! It didn't help that a month after I started, May selldown came because of interest rates issue in US.

I eventually made back my paper losses (I didn't know what's cut loss, so I didn't cut loss). It's easy, because it requires no effort on my part, I just have to wait for market to recover. To speed up, I started warrant trading on HSI, when I knew nothing about TA. It's only AFTER I started on HSI warrants that I learnt more about TA. It's just a disaster waiting to happen. A string of good luck with HSI powering up towards the start of the new year made me recover my paper losses and even an extra 3.5k.

Disaster did happen around Jan to April. I started losing my warrants trade. For every 0.5% gain, I was losing 10-20% in warrants trading. I won big, I lost even bigger. I won so much last year due to luck, not skill. I thought I was good, but I wasn't. Just lucky. That ability to distinguish between luck and skill is impt, even decipher mentioned it before.

As you can see, I was trading warrants almost everyday, gaining a few hundreds but losing a few thousands. It's so incredible....I would NEVER do that again! Before long I was around 15k negative again.

Then came longcheer saga. I was so caught by up the 3G frenzy that I kept adding on to longcheer. Even KT advised me to play according to what I can, but caution was thrown to the wind because I was confident of it. No margin of safety at all. I didn't even differentiate a speculative stock from an investment quality kind. The big fall came when longcheer posted less than expectated results, price fell from 1.20 to 0.60. I still didn't have the discipline to cut loss...I lost around 15k due to that (I had 25 lots of longcheer).

That pretty much chalk up my 30 k losses. I already had 15 k realised losses (not paper losses) and realised another 13 k losses by selling longcheer. I wanted to start on a fresh new portfolio, but this time, slowly and surely gaining back all my losses. It's harder to erase my 30k losses (28k realised, 2k paper) than last year's 18k losses (18k paper).

Okay lah, enough of my story.

I still aim to earn $200 per week ($10,400 per year) from the stock market. Last time, I was focusing too much on the "week". I wanted to earn 200 every week. But I realised it's not like that...the 200 per week target is averaged over at least 1 yr. If I can make back 30k in 4-5 months, who knows if I just might hit the target?

Haha, cheers!

Wednesday, July 11, 2007

Yongnam VS UOB.....yongnam wins!

STI didn't do too badly, given that Dow dropped 148 points last night. Even briefly went up to positive before closing lower by 25 points. Volume also much lower, a good thing. Practically, I don't see much correction at all from my watchlist. Property / banks continued its decline, bringing STI down.

All the construction stocks are so shock resilient. Cosco the mad one even went to close at all time high of 4.64. Much more than the target price I set. More about that in a separate post to wrap up my huat funds selection.

Haha, quite happy to see this TA chart posted by Decipher. It's exactly the same the chart I did for strait asia yesterday!! Even the support level is the same, with similar conclusion. Decipher see support at 1.40. with possible upside because RSI is oversold. My support is at 1.41, followed by 1.31, with possible upside because stochastics is near support level of 20%. This really boosted my confidence in my chart reading :)

Just saw the announcement that Cosco won US563 million aggregate contracts!! My god...this powerhouse just keeps winning and winning. I must get some of Cosco shares when it dipped...WHEN it dipped that is. Everyday see it cheong, really regret why I didn't buy when it was 2.60 something. But I must remember, never to chase it when it went too high, almost committed the mistake again when I was tempted to enter ausgroup when it broke out today. Wanted to buy at 2.06/2.07 but eventually decide against it. Today ausgroup closed near breakout level, 1.990.

Yongnam today halt trading, pending announcement of the court case ruling between UOB and yongnam over spring leaf tower. They just announced that UOB's appeal had been thrown out, hence yongnam won the court ruling. THIS MEANS IT JUST WON 18 MILLION!! Eh, not so happy yet....since yongnam is super punters stock, tmr 2 things can happen.

1. It cheong a lot then nobody took profit, break 0.60
2. It cheong a lot then everyone took profit, drop back near 0.555.

Haha, let's see which scenario will take place tmr. I'm only holding 10 lots, still very confidence of the prospect of yongnam (and the pending IR contracts, possibly out this month end), so I would'nt cash in. If this is CSC, hahaa, different story...I'm sure to lock in my profits first.

CIMB raised the target price for yongnam to be 0.61 on this report (link courtesy of Singapore markets). What's important is actually this paragraph:

- Positive impact in favourable outcome. Yongnam previously wrote off S$13.972m for the Springleaf Tower project in FY03, concurrent with its Section 210 scheme of arrangement. As such, a favourable court decision would result in a write-back of the same amount, less about S$3m for project billings. Meanwhile, should the 10,742 sf office property be sold in 2007 at the current rate of S$2,000 psf for the Shenton Way and Raffles Place CBD area, there could be an extraordinary gain of up to S$7m, boosting our projected FY07 net profit from S$17.6m to S$32.9m. Also, the additional cash could be deployed quickly for its new Malaysian plant or the repurchase of its steel struts.

CHoffshore also reached new high, closing at 0.88 after breaking out. Looks like it's getting more attention from investors as the potential extraordinary gain of disposing its low book value vessels gets known. Should be looking to retrace, after such a protracted up move, then I might be looking to enter another batch again.

CSC sent me its annual report. Not the first thing I received one, but definitely the first annual report I'm going to read seriously. Still trying to learn FA...so must read and read and read all I can. I heard from some forum users that the contract for IR will be out this July, so did CSC management said. Don't know true or not...I'll read it myself.

My portfolio losses getting near break even, now at -1300 now. I must get my exit plan ready to lock in my paper profit. As of today, still trying to sell my yellow page, though I reduced the price to sell at 1.38...nobody wants :(

Dow +41 now, europe all red.