Friday, August 31, 2007

STI up 71 pts (2.16%) to close at 3392

STI quite powerful :P Divergence from Dow, when dow up, we go down; and when Dow goes down, we go up (a lot!), haha!

STI increase 71 pts (2.16%) to close at 3392, with a volume of 1.93 billion (warning sign - too low volume). From what I can see, the rally is broadbased but the volume is entirely not convincing. A lot of bank and property stocks went up a lot and pushes STI up, but the volume cannot be manipulated. A lot of people are staying on the sidelines, perhaps Dow labour day holiday (i think on Monday) is getting people nervous enough not to hold over the weekend. Oh, Ben is speaking tonight too, not yesterday.

Construction stocks lead the pennies today. CES went up to close at 0.900, perhaps on rumors that another contract worth even more than the 58.5 million that Lianbeng is going to be announced over the weekend or next week. From Sands Marina, the management said contracts are going to be announced in a "matter of days". Days, and not weeks, so should be less than 7 days? So next week is the latest to announce? Judging by the volume and interest on construction stocks, it seems very likely. All speculative plays :) Good time to sell on strength next week.

Wanted to sell Lianbeng at 0.490 but nobody buy from me again. CSC is the one I want to sell, holding way too many at too high price already. Let's hope it gets another contract for foundation for the other IR (can't remember which IR is the 280 million contract for).

Dow up 100 pts now, Europe very green (around 1% up). Looks like we're going to have a wonderful show for Dow.

Interesting theory that works for the whole month of Aug. To predict STI, look at the weather in Singapore. When it rains, STI drops a lot. If it's sunny, then STI rises :) It's really true for August, as mentioned by some creative genuises over at cna forum, ahha :P

Thursday, August 30, 2007

Nikkei bear market from 1991 to 2003

Market crash series again. Nikkei in its heyday was at 40,000, my goodness! Now nikkei is only at 16,000, and they still haven't recovered from its heyday! Ouch ouch ouch....


Can a bear market last for 14 straight years? Well, this is exactly what occurred in Japan, starting in 1991.

After World War II, Japan was devastated-several of its major cities were obliterated and its economy was virtually nonexistent. Due to much effort and hard work, the Japanese economy slowly began to stabilize and recover. Additionally, the United States helped Japan rebuild, and provided capital and military protection, as well. The value of military protection should not be overlooked, as this is usually the highest expense of any government. This benefit allowed the Japanese economy and government run more freely and efficiently.

Factories were quickly built and peasants became factory workers. Middle and upper class men became white collar workers, called salarymen. Salarymen and factory workers were offered lifetime employment. This caused salarymen to have fierce loyalty towards their employers. Most Japanese workers at the time were highly frugal, saving much of what they earned. Many companies merged together to become large industrial and banking conglomerates, called zaibatsu.

The zaibatsu gained their competitive edge by copying and improving Western products and selling them for much cheaper. The cheaper products won Western customers and started to hurt US companies. Tremendous economic growth occurred allowing the zaibatsu to evolve into even larger business alliances, called keiretsu. The keiretsu philosophy was one of cooperation, where all facets of business and government worked hand in hand. As the Japanese stock market soared, the keiretsu purchased each other’s shares.

In the 1970’s, the oil crisis and inflation crippled the global economy. Most American cars had large gas guzzling V8 engines, which cost a fortune to run. Japanese car makers, such as Honda, quickly mobilized to produce small fuel efficient cars. Additionally, these cars cost a fraction of the price of American cars. These cars were quickly increasing in quality, as well. Even as early as the 1960’s, Japanese cars were being assembled with robots, making human error almost nonexistent. This started the decline of the low tech American automobile industry. Throughout this entire boom, the Nikkei stock average was soaring to new heights.

By the 1980’s, Japan added electronics to its list of specialties. Japanese keiretsu corporations, such as Hitachi and Sony, copied and produced quality electronics hardware needed by the growing computer industry. Japan trounced American companies, due to its ability to compete on price, aided by robots and cheap labor. With the exception of microprocessors, Japan dominated the market for all chips, circuit boards and other components. It was widely believed that Sony and Hitachi, would eventually acquire Intel and IBM.

Throughout the 1980’s, Japan became viewed as a utopia, due to its people having the highest quality of life and longest life expectancy. In addition, Japan was the world’s largest creditor and had the highest GDP per capita. Many Americans feared that their workforce would become obsolete due to the use of robots in Japan. With the economy booming and the stock market climbing, Japanese corporations crammed many skyscrapers in Tokyo and Osaka. This caused real estate prices to skyrocket as well. Between 1986 and 1988, the price of commercial land in greater Tokyo doubled. Real estate prices soared so much that Tokyo alone was worth more than the United States! Between 1955 and 1990, land prices in Japan appreciated by 70 times and stocks increased 100 times over. An average home near Tokyo cost well over $2 million in 1989. Large scale stock speculation occurred causing a worldwide mania. Investors all over over the world were vying for Japanese shares. These euphoric investors believed in the fallacy of a perpetual bull market. Luxury goods were purchased in large numbers by the newly wealthy.

Unfortunately, all excessively good things must end. To cool the inflated economy, the Japanese government raised rates. Within months, the Nikkei stock index crashed by over 30,000 points. At its height, the Nikkei stood at 40,000. The Nikkei could crash this far because its value was inflated on false hopes and hype, not solid financials. Eventually, many scandals came to light showing the corruption that always occurs in a bubble’s heyday. Japanese housing prices plummeted for 14 straight years, and may continue in the future. The Nikkei sank until its low of 8,000 in 2003. The Japanese government and corporations are still suffering under unwieldy debt loads gained since the late 1980’s. This debt was used for stock speculation and buying overpriced land. Even today, in 2004, the Japanese economy is still in the doldrums.

Once again, we have seen the development of a bubble and the inevitable stock market crash that always follows it.

STI from green to red; down 13 pts to 3321

Wah, leave home green green, come home red red. That pretty much describes STI today. STI closed down 13 pts (0.41%) to 3321 despite Dow marvellous performance last night when it closed up 247 pts. STI volume is 2.5 billion, much more than yesterday's 2.2 billion.

Construction counters made a brief rally in the morning before losing some of it gains by market close. Lianbeng leads the pack and brought investors interest back into construction play. But overall market sentiment wasn't good, so in the end also lose steam. Tried to queue to sell lianbeng at 0.490 but nobody wants to buy from me :(

Straits asia really hit upper trendline, and went down. 1.38 support did held and the stock even rebounded intraday from that point before coming down again to close at 1.39. Actually the charts look pretty decent, because the price hit 20 days ema and rebounded off from that. Need more time to see how it all plays out.

Swiber announced today that it acquired 4 vessels at the cost of US$70.6 million. Details are here. Wow, their action so fast. Just recently they placed out bonds to raise capital so that they can enlarge their fleet size and today they said they acquired it already. Fast and efficient management :) They mentioned that in order to accommodate its phenomenal growth, Swiber had increased its fleet of vessels from 11 to 20, comprising of 9 tug boats, 9 barges, 1 crane barge and 1 jack up barge. There are a total of 13 vessels currently under construction/conversion. With the new addition of 4 vessels, it'll bring Swiber's fleet size to 36 by 1QFY09.

US going to release GDP and jobless claims tonight, both of which will be watched closely by investors over there. Ben will also make some speech tonight which will be scrutinized for the slightest hint of rate cut in september. Dow's future isn't pretty, it's -50 as of now. Europe mostly green (slightly).

Wednesday, August 29, 2007

STI reversed from 2.3% loss to 0.25% loss; LianBeng won Marina IR contract

Looks like this is going to be a rather long post :)

Firstly, let me comment on STI today. STI did a very good job, reversing 2.3% drop in the morning to close at 0.25% at 3334, with volume transacted at 2.22 billion (similar to yesterday). Should have dropped 1 more pt to close at 3333, sheng sheng sheng! Marvelous support provided by buyers when STI nears 3250 intraday. Even on my watchlist, I can see that the selling is rather muted and confined to STI index stocks (namely DBAss and some banks). Market is much calmer than a few weeks ago, where a similar drop of 280 pts in Dow would have caused STI to drop maybe 3% or more. Today, there is buyers supporting each critical level. At least people are more rational now :)

Lianbeng halt trading today and I JUST SAW THAT IT WON A CONTRACT FOR MARINA IR!! :) Contract size is rather small to me but it's better than nothing. The $58.5 million contract is for the services provided relating to the construction of the basement of all three towers of the hotel. Work is to be carried out in 2 phases and is expected to be completed in 22 weeks (around 5 months). The group's order book is boosted to $375 million as of now.

Haha, no wonder all the construction stocks didn't fall together with the rest! Chip Eng Seng closed up 0.070, CSC up 0.020, Yongnam up 0.020 and Koh brothers up 0.025. Hmm, is it a good time to sell off lianbeng now?

I might want to take profit off the table first. Been holding too many construction stocks and wanted to trim off my construction portfolio before the credit woes started and dashed my hopes. Tmr might be a good time to offload lianbeng. 0.490 or 0.540 might be a good price to queue to sell. But really have to see the price action tmr (which I can't see because of work) to decide. If the reaction is strong due to positive news, then all resistance is thrown aside. Probably I'll just queue to sell in the morning, don't be greedy : )

Another stock that caught my attention is Straits asia. Very resilient during the big selldown. I see a symmetrical triangle with decreasing volume and the outcome of the impending breakout is uncertain now. Could either be up or down. Short term, I see a downside because the price is hitting the top trendline.

However, it could be well supported at 1.38. I wonder why it's so resilient...hmm...

Dow is now at 65 up, Europe rather neutral with mix of red and green. Tmr construction stocks should see a lot of action :) CONSTRUCTICONS TRANSFORM AND RALLY!

Tuesday, August 28, 2007

STI down 45.44 (1.34%), close at 3343

Hmm, today market did turn down. STI dropped 1.34% to close at 3343 with a volume of 2.28 billion (higher than yesterday's volume). Quite expected because STI opened up strongly yesterday but didn't move up, so it have to move now. Even for today, STI rallied quite strongly in the morning, but after lunch it went limp and never recovered back the losses.

However, I must say the selling is quite muted now as it's rather restricted to STI component stocks, namely DBAss. Heard that SGX is going to do a 'routine' check on possible disclosure announcements. Yeah, right, hope they got some punishment for not declaring to investors about their actual exposure. DBS dropped 0.600 today, pulling down STI with it.

A lot of people are slamming Genting. I do not know what's wrong with it, no feel for the market. I do know that after its rights issue, the mother and rights shares just keep dropping and dropping. Not totally unexpected right? The bad market sentiment surrounding credit (Genting issued rights shares to raise capital for the IR construction) and the long time frame before Genting can start earning contributed to the downward selling pressure of Genting shares. It's a good thing I sold off my Genting shares when I bought it around $1, if not really can cry for holding at high.

As time passes, I'm less and less interested in Genting. It's speculative because a lot of thing can happen in the time frame between the opening of IR and now. The promised rewards of IR is also speculative. I'll rather invest in something a little more confirmed. Malaysia is also building a economic area called Iskandar development. Supposed to act as small economic hubs to allow the investment to trickle in different parts of Malaysia.

Tonight there is a lot of economic data coming out. Dow should be volatile and this will spill over to STI when it opens tmr. So far, Dow is reacting negatively, it's currently at 150 pts down. Aiya, relax lah. Market is much calmer now and is actually less volatile than say 2 weeks ago?

Cheong ah!

Monday, August 27, 2007

3388 - 4D number :)

Wasn't around the whole day, but I got a bad feeling about the market.

In the morning, possibly based on Dow's Fri performance, STI was up by around 50 pts, but when I returned, it closed 19 pts up at 3388 (want to buy 4D? haha!) with a rather low volume of 2 billion shares transacted. Gainers to losers is 647 to 218.

Nikkei opened 230 pts up in the morning but closed just 50 over pts. Signs of distribution? Possibly downside in the next few days? Hmm...I think it depends on Dow again. If I'm not wrong, they are going to release a few key economic data this week so it could either shift the balance to bullish or bearish.

I think the important ones are existing home sales on 27th August (tonight), Consumer confidence and FOMC minutes (tmr), GDP Q2 and jobless claims (wed). With all these power packed economic data coming out this week, I think Dow is going to be pretty volatile.

Quite a lot of stocks rallied today. Construction play is in for today, with top volume stocks like lian beng and yongnam leading the pack. Swiber, possibly due to good analyst reports on The Edge and a couple of brokerage report on target price (around $3 and beyond, can't remember) rallied strongly to close up 0.130 at 2.810 (intra day high of 2.880).

GK Goh also not bad, up 0.050. They reported insider buying to increase their stake, from 52.20 to 52.24%. I've always said this, there are a myriad of reasons why insider sell off, but there's only one reason why they buy in; they are confidence of the future price of the shares.

I'm still as busy as ever. Hardly have time to analyse anything. Might as well, no more bullets left. Hope downside risk is limited now. It's good to see my portfolio losses going to around 11.1k now.

Sunday, August 26, 2007

Going to take charge of my health

Today heard a rather sad news about a person's passing; at a rather young age of 38 due to cancer.

Reminds me of the vulnerability of one's body. Never take life for granted. I'm actually quite morbid because I think that the moment you are born, you are already dying. Dying takes place over a whole life time and the moment we actually 'die' just closes the deal. It is something like day and night. When day begins, night is beginning and when night starts, day is beginning. There is no boundary that separates day and night because it is a gradual process and they overlap one another.

I will actively take care of my diet from now on. I'm already going almost vegetarian on every Sunday. I'll try to eat more vegetables and abstain from fast food. That is the lesson I learnt from another person's death. Probably going for medical checkup next year and on a periodic basis too. It's never to late to take charge of your health.

My condolences to that person. Peace be with him.

Friday, August 24, 2007

STI neutral today

The volume of STI today is so thin, almost nothing moved :P In the morning, there was a brief selldown, perhaps profit taking? Then it got fiercer and fierce, though on low volumes after news came out that DBS underdeclared its exposure to CDO by around 2 times. Around afternoon, buyers came back to push up STI to close at 3369 (down 0.04%) with a volume of 1.6 billion.

DBS really something. No wonder some of my forum friends called it D-B-Ass. Nonsense... To think that I believe that Singapore banks would not do such thing as underdeclare their exposure like other foreign banks. Nah, all the same. I wonder if DBAss would get some punishment for misleading investors with their statement that their exposure is less than actual. Their spokesperson gave no reason for giving the wrong amount initially. Crap.

2 news from sgx announcement caught my attention.

1. Swiber successfully placed inaugural bond issue for S$108.5 million, consisting of S$54 million 3 year fixed rate tranche and S$54.5 million 3 year floating rate trance issued under mulitcurrency medium term note programme underwritten by citicorp investment bank. This bond issue is met with very strong demand despite the overall bad market sentiment surrounding bonds. The capital raised is used to expand the fleet size of Swiber.

2. JP morgan and affiliates pared down their stakes in Yongnam from 9.38% to 8.50% around 21st Aug. Could be bad or good, because selling off stakes could have a lot of reasons. But if they buy, it could only mean one thing - they have confidence in the future price of the stock. Neutral news.

Lianbeng suddenly have lots of buyups towards market close, size is around 300-500 lots per transactions. At market close, 850 lots are transacted. Hmm...interesting news coming out next week? They are always insiders who know more than normal retailers, so the best gauge is not react to news but to react to the volume and price action of the stocks before and after the news. Something fishy going on, or am I thinking too much?

Total portfolio losses now stands at 14.7k.

Dow up 25 pts, Europe mostly green.

LS, here's the information that I think you'll need. Give you an example.

Lianbeng announced a dividend of $0.0022 per share. That works out to $2.20 per lot (0.0022 x 1000 per lot = $2.20).

Their XD is 25th Sept and date payable is 10th Oct. Other information like buy in last cum date and record date are not relevant for us.

Since the XD is 25th Sept, I'm going to see Lianbeng's counter with the remark CD besides it all the way from now till 24th Sept. If I'm holding the shares before and on XD (i.e. before 25th Sept and 25th itself), I'll be entitled to the dividend payable on 10 Oct. That will mean that if I sold on and after it turned XD, I'll still get my dividend.

However, if I buy after XD (i.e. on and after 25th Sept), I'll not get the dividend already. The dividend is given to the seller whom I bought the shares from. If I buy before XD (i.e. till 24th Sept), I'll get my dividend.

To simplify things, if you're holding shares (doesn't matter contra or actually holding in CDP account) when the stock declared XD, you'll get the dividend. It doesn't matter if you sold on XD, you'll still get dividend. If you buy when you see CD (doesn't matter contra or actually holding in CDP account), you'll get the dividend too. If you buy after you see XD, too late already, no dividend.

Hope it's clear :)

Thursday, August 23, 2007

STI up 49.4 pts to close at 3370

After dow closed up 145 pts up last night, STI responded by moving up 49.4 pts to close at 3370 with a volume of 2.8 billion (compared to 1.8 billion yesterday). From my watchlist, I can see a lot of counters moving up. The volume for the surge up is higher too compared to yesterday.

Cosco announced a contract of 700 it cheong up 0.160 to close at 4.940, real power house. Swiber went up 0.200 to close at 2.70 too. Lian beng announced a letter of intent to joint develop a private condominium off Upper bukit timah road with LaSalle investment management asia. Lian beng will be offered a 10% stake in the shareholding of the new company set up and will be the main contractor for the project, valued at about S$46.5 million. Not expected to have effect on FY ending 31May 08.

Straits also went up 0.07 to close up at 1.290, while Pac andes went up 0.050 to close at 0.725. Wow, haven't see Pac andes at 70 cts for quite some time now, hope people will realise how cheap this stock is compared to its valuation. Anyway, I'm glad that my losses pared down even more to 14.2k. Good good :P

I have no feeling for STI now, because I'm sort of out of touch with the market. Looks good to me, but I could be wrong. Dow is down 10 pts, Europe mostly green.

Wednesday, August 22, 2007

Lian beng trading halt; STI up 92 pts to close at 3321

Lian Beng trading halt today, but as of now, there's still no news as to what the halt is about. From what I see, it shouldn't be the BIG one. Must be some small news or worse - placement shares. But can't be lah, market so bad, who wants to do placement now? (haha, actually there is one company doing rights now - Genting)

I see STI testing support at 3260 twice in the morning but didn't break it, so after lunch it shot up 92 pts (2.88%) to close at 3321 (near resistance), with a volume of 1.8 billion. Volume is getting thinner and thinner. Best time to play index warrants is now, because volatility is extremely high for STI, which don't happen often. I remember STI up 20 down 20 is the normal a few months back, but now it's capable of doing up down 3% daily. I just don't like the thin volume when rallying. Have to wait to see more confirmation of uptrend.

Most stocks are up today, including those in my portfolio. This fake rally shaved off quite a lot of losses for me, so I'm thankful for it.

Oh, one more news. China raised rates from 6.84 to 7.02 to curb their explosive stock markets from bursting. This is the 4th time they raised the interest rates this year already. Judging from past experiences, the drop will come a few day after. If it didn't drop, I'll be worried actually because it shows crazy Chinese have absolutely no regards to the bubble they are blowing bigger and bigger everyday. Anyway, all these just means more volatility. From past experience again, the drop will just make them buy more and the result is that HSI and Shanghai bourse will go even higher before the drop.

I'm thinking more and more than we're poised for a wonderful year end rally this year to mark the last leg of the bull, possibly lasting till middle of next year. Could be just my lonely fantasies :P

Dow is up 111 pts and Europe is all green (most around 2%).

Hear only the good news

Pardon my post on the CPF rates much earlier. I've said too much too soon.

Seems like the style that PM introduces new schemes or plan is like the TV advertisement on one of the radio stations, "Hear only the good news". In this case, say only the good news. Yes, the CPF rates for the first $60,000 combined will increase by 1%. But here's the catch, the rates will be now pegged to long term government bond (around 3-3.5% for 20 yrs). I'm supposed to get a smaller rates now, so I can get a higher rates in the future, so they say. No longer will we have guaranteed 4% returns now, so the lesson here is nothing is guaranteed.

I wonder why we have to put in CPF and get miserable long term bond rates (and expose ourselves to volatility and risk). The bond rates can't even cover inflation, my god.

This just means I have to work harder on my own investments than rely on anybody, even the government. Makes me rethink about putting more into CPF when i mentioned in my previous post on the same topic.

The gripe I have is more about the compulsory annuities scheme imposed on a portion of the minimum sum with CPF members below age 50. CPF members can withdraw their CPF amount at age 55, leaving a minimum sum behind which can be withdrawn at age 63 - 65. Now the powers that govern us wanted members to buy a compulsory annuity using a portion of the minimum sum, so that we can get monthly payout for life, to protect us against longevitiy. The problem is that if we did not live past 85, the remainder of the annuities sum we purchased will be given to a pool so that it can be given to those who are still living. If we want to get out the remaining money upon death, we have to pay a higher premium on the annuities.

Hello? I can't even decide to donate my money to others or my family now? I still need to pay more money so I can get out my own money? This must be a real eye opener - state controlled people funded welfare system. Government controlling our funds so that we can pay a portion to fund others...what the hell? Just go to cna forum market talk section and see how people respond to this. It's both funny and sad.

SO what's next? Compulsory euthanasia upon hitting age 85 so that we won't burden the nation, our families and fellow singaporeans? Longevity is a disease in this new world.

I can only think of this song by Story of the Year - Until the day I die.

Tuesday, August 21, 2007

STI down 93.7 pts

STI lost some of its gain yesterday by closing down 93.7 pts to close at 3228, with a vol of 2.13 billion (even lower than yesterday). Gainer vs losers is 298/621.

Not around to see what is happening. I just knew that STI after peaking around 10am, went down all the way, rising a little before closing for the day. HSI also lost most of its intraday gain. When it opened around 10am, it was around 900 plus? But it closed up 133 pts.

It's okay to take profit after such a strong rally yesterday. I saw from newspaper that the gain is the 2nd highest since 1987. So profit taking the day after is quite healthy. Short term should be positive for STI, but longer term is still a big question mark. The counters I'm holding also lost the gains it had in the morning, some even closed down negative. Oh well, must be prepared for ups and downs I guess :)

Europe is a mix of red and green. Dow cuurently is +30.

Haha, my posts are getting shorter and shorter. It's what happens when you mix a lack of time and market feel together. I'm getting really busy these few weeks, hardly have time to do anytime. All the best!

CPF rates increase; new rules for chinese to invest in HK

2 news to share over here.

First is the proposed increase in CPF interest rate. Government is going to increase the interest rate earned for the first $60,000 in combined CPF accounts by 1%. That's a rather hefty sum if you put it in for 20-30 years because of the magic of compound interest. Haha, this might make me put more into it to take the news into account.

This interest rate of 5% (for CPF-SA) plus inflation 3% - total of 8% will set the benchmark for my investments. I hope to earn more than 8% returns in my investments averaged over a long term. This is actually quite achievable and I'm aiming to get around 15-20% returns actually. No problem beating the max interest rates for CPF plus inflation.

The other news is the new ruling by China that its residents can now invest directly into HK stock markets. This opening up of the rules will see a flux of chinese money flooding the market at hongkong (congrats HH!). This might explain why the futures of HSI went up to 600 plus this morning before it opened. HSI responded by rallying up 1200 points yesterday and around 100o pts just now.

All these influx of funds are good for us, though we are not the direct beneficiaries of the money. Some of the listed companies in STI have dual listing over at HK too, so this influx of capital will be good for everyone at the end of the day.

As for STI, it is powering up 35 pts up now, after a morning drop. The next point to look out for is whether STI will go up to 3400 level. Another 50 pts more to go, not entirely impossible. The worst might not be over yet, and we'll have to see how FED plays out the balance between the risk of inflation and the risk of downright economic recession. Crazy times these days :P

Monday, August 20, 2007

STI up 6.12% (BIGGEST increase i've ever seen!)

STI clawed back up 191 pts (6.12%) with a volume of 2.5 billion (low vol), with a total of 883 gainers to 125 losers, closing at 3322. I've never seen STI rally up 6.12% ever! A real eye opener today :P A rather broadbased rally from what I can observe from my watchlist. Most of the banks and property stocks went up a lot. Low volume is what worries me.

I wouldn't say we are out of the blues yet. Again, we have to check for higher lows and higher high before we can confirm that an uptrend is ongoing. At best, we have to wait for confirmation over the next trading sessions to see if resistances are broken. At least for today, 3300 hurdle is crossed.

Across asia, stock bourses boomed after the announcement of the reduction in fed discount rate given to banks. Shanghai went up 5.33%m, HSI the powerhouse went up 1200 pts (I've never seen this before in a single day!), up 5.93%, Jakarta composite went up 6.97%, Nikkei up3% and South Korea Kospi went up 5.69%.

Most of my stocks went up a lot, though I'm hoping more :P My losses dropped to 18k now, still nursing from the recent battering. From what I see, there are 2 scenarios that can be played out. A lot depends on how FED rate meeting goes on sept 18. If the situation worsen over at their side, they might just cut rates to save their economic from sinking into recession, thus saving buying time for the inevitable. Either way, STI might benefit from the sell off and buyers might come in and we'll have a wonderful year end rally to celebrate the last leg of the bull run till early next year. Another scenario would be that despite all the good news, we didn't move up. Then we can all sit tight and prepare for bear to consume us all.

I'm too tired to chart out any supports/resistance for STI nor any of my stocks. See see look look can already, ahah :P

Dow up 13 pts, europe all green.

Friday, August 17, 2007

FED cut discount rates to 5.75

Today is another tua lao day for STI. Nearly got killed man...the selling was so intense and fierce that my counters got whacked from the start. I simply have no heart to look at it anymore. All my support levels I listed last night was breached. Swiber even went down to 1.99 (my god!) and cosco went from $6 pre-correction to the present $3.90. Nothing is left unturned by this bear raid.

This is indeed an eye opener for a newbie like me. It makes all the correction I've been through downright childish and insignificant. I've been through '06 May, '07 Feb and June but this is the worst ever. It really tested my mettle to hold steadfast when the crowd around me sold out to cut loss (I even went to buy...atlas, cheap gets cheaper these days). My confidence and smiles are slowly eroded as my portfolio went from break even to the now 21k losses. Almost reaching my max of 30k already, sob sob...

I will survive this and I also learnt 2 important lessons in this episode.

1. Margin of safety. Despite how badly Swiber and straits got whacked, I'm still net positive on these 2 counters. All my other counters turned from green to red (some from red to VERY red). The reason? I bought at a very low price. Even after such a drastic drop, my returns for swiber is still 50%. THAT alone shows how important it is to buy at a very low discount to valuations.

2. Reserve and discipline. This is linked to the 1st point. To buy when stocks are up is suicidal. To buy when stocks when dipped down is better but still risky. To buy when everyone is selling and there is absolutely no buying sentiment is the best time ever! Discipline to hold on to your bullets and not swing at ever pitch, discipline to buy when no others dare to buy is the key to successful long term investing. My hard earned money is meant for times like this - buy cheap when market is selling irrational! (not to be confused when stocks drop because there is fundamental problems to its business...line is hard to draw between the 2 sometimes)

Still not bad right? Learnt 2 points, pay 21k for it :P

Some news from SGX announcements:
1. GK Goh made direct market purchase. There are many reasons for key holders to sell their stake, but there's only 1 reason why they buy - they believe that their company are worth more than the current market price in the future.

An interesting turn of event happened minutes before Dow opened. In an unscheduled meeting, FED reduced the discount rates it lent to banks from 6.25% to 5.75%. This is especially significant since a few weeks (is it last week?), FED meeting left rates unchanged. Now the interest rate (5.25%) is different from this discount rates (now 5.75%). From what I understand, this discount rate is applied to banks that seek funds at the so-called discount window of the FED, which is very different from the 5.25% interest rates that FED lends to banks.

From this, we know that the problem had ballooned into something that is serious enough to warrant an immediate response to curb the liquidity problems in banks over at US. On sept 18, there will be a FED meeting to determine the interest rates. They might very well raise the rates to save their economy from turning into a big recession. Rather, they can try delaying the inevitable from happening. Dow opened up 200 pts, but now is around +100.

Hard to say what STI might respond to this. I hope it's good. The fact that we can go from -190 pts to -21 pts (with volume of 3.6 billon, way higher than yesterday) is no mean feat, which mirrors Dow's last night performance from -400 to -15. We might see a reversal coming soon. This is exactly the opposite of fact it's accumulation. I would love to see another big big drop in the morning followed by a neutral or slightly positive close at the end, with high volume to confirm this reversal move. But don't believe me, I'm an amateur.

Good luck to all!

Thursday, August 16, 2007

Defence lines for my portfolio

STI dropped 121 pts down (-3.70%) to close at 3152 with 2.7 billion volume (higher than yesterday). Selling is severe and broadbased. This is after Dow dropped below 13,000 pts to close at 12,861. Worldwide market is a sea of blood. HSI - down 3.29% to close at 20,672; Nikkei - down 1.99% to close at 16,148, Shanghai dropped 2.14% to close at 4765. South korea KOSPI is the worst hit, 6.93% drop.

Europe severe selling again (drop around 2-3%). Dow -75 now. If Dow drops below 12,700 plus (long term trendline), we're gone.

This would be short and brief :) I'll be drawing defence lines for my stocks.

Pac andes:
0.590 (rights adjusted)- long term support, had been supporting the price since last april

Straits asia:
1.12 support, thereafter 0.990

2.40, thereafter 1.97 (long term support)

0.26 (ema50 days too), thereafter 0.205

0.38 (current price now), 0.340 thereafter

Lian beng:
0.36, thereafter 0.31

GK Goh:
1.12 (current price), 1.05 thereafter

Oh, Peru 7.9 earthquake last night... China fishery which operates around the area reported no damage to their operations. I realised how natural disasters and global climate directly affected me and my stocks, never see it that way before. Why are there so many earthquakes recently?

Hope those in Peru are doing fine. My condolences for those who passed on.

Always look on the bright side of life

Haha, always look on the bright side of life :P

What I felt about this whole thing

What an ugly day today.

Dow broke 13,000 support and closed at 12,861 (-1.29%). A lot of people are thinking whether Dow will sink into recession as a result. I think not. The stock precedes the economy by half a year at least, so the seeds of recession must have already been grown. The stock market just reflects it. Did Bernanke screw up by refusing to cut rates and insisting that inflation is a more serious concern? He would have to answer to that himself.

It's a vicious cycle actually. US had been too easy to lend out money to people. For those without the ability to pay or with bad credit history, loans lent to them are called subprime loans. As the risks of default is higher, the interest rates charged for them is higher than normal loans too. Around the start of the year, FED raised interest rates to 5.25%, causing worldwide correction. Eventually the stock market rose to greater heights but the beginning of the problems we face currently had just begun.

With rising interest rates, those subprime loan borrowers faced greater difficulty in repaying them loans. Signs of default are shown around Feb 2007, but it wasn't as full blown as now. The problem is spread globally because of the funny things you can do in business - selling debts. Yup, debts can be sold in the form of collaterised debts obligations (CDO). Why would people want to buy debts? Assuming that people would ALWAYS pay their debts back, then buyers of these debts would get a payment that works somewhat like coupons for bonds or dividends for stocks. You must be questioning what happens if people don't pay back their debts.

If people do not pay their debts (that is, defaulting), buyers of such debt instrument would have to bear the losses. Global funds that have exposure to subprime loans are selling their stocks to raise liquidity because investors would want to cut their losses and protect their profit if any. THAT is what happens now. Even SGX starts to liquidate its funds (announced yesterday) in case investors want to cash out their positions.

Really, what goes around comes around...everything springs from the fact that US started easy lending. Isn't it very similar to the market crashes articles I posted periodically? Mississippi saga, South Sea bubble....

And we haven't even talked about yen carry trade (yct). Bank of Japan (BOJ) had in the past lent out yen at very very low interest rates. This cheap money is borrowed by funds globally and partly contributed to a huge influx of liquidity that swirls around the market. Singapore is one major beneficiary to this influx of foreign funds. Chances of BOJ continuing to lend out money at this low interest rates is getting slimmer and hence those funds that borrowed yen to invest might have to sell their holdings to return the yen back to BOJ, otherwise they might incur foreign exchange losses. Cheap money is no longer that cheap. It's already happening, take a look at Straits time money section today.

It's very interesting that before this issue begins to emerge, everybody is worried about the bubble that is bursting over at China. Everyone is talking about how the PE value of china stocks are super inflated, so the moment it burst, it would send waves of selling across the globe? Little would anyone expect that the problem would come from US itself. Interesting is the financial world huh?

How do we protect ourselves from the financial weather that erodes our portfolio? I have no ready answers for that. I myself is at the mercy of global winds of change. In such times, there is no point wallowing in sorrow and self pity. Two actions I would advocate: sell out or hold out. Buying now is a big no-no because as of now, STI had broken 200 ema support, so that's a big bad sign. STI is like a pond of water. You stir it vigorously and everything because muddy and unclear, so don't go bottom fishing now. You might lose your bait, your stick and most importantly your confidence. Why not wait till the mud settles (yes, it will take a long time) before jumping in? For me? My lines are already in, so I'll just wait.

Now is the best time to concentrate on other things in your life that you always wanted to do but have no time. With such bad market sentiment, no point staring at the watchlist all day. I'll rather read up more on fundamental analysis and learn a few more songs on my guitar. Oh, and that very irritatingly addictive game that cheemie introduced to me, 9dragons.

As I blogged, STI rebounded upon reaching 3100. Short term recovery (technical rebound) happening.

Wednesday, August 15, 2007

STI drop 3.35% to 3,273

Market turned down globally after dow dropped more than 2% last night. STI dropped 3.51% in response, together with HSI (2.87%) and Nikkei (2.19%). But the volume is quite light when I see the watchlist. Yup, it dropped a lot but the volume that dropped is quite low. Total volume transacted for STI is 2.4 billion. Shanghai is the only only that stayed neutral (dropped 0.06%).

Major selling in my counters :( Swiber and straits got hit especially hard. Swiber close down 0.130 while straits close -0.100 down. But bloody hell china transcom still holds well at 0.500. Oh what luck... Construction counters gave up all its gain made yesterday, perhaps even more. Buyers are always conned into a fake rebound and when dow show its ugly face, STI will go down together with it.

CSC made an announcement that another company called Isyoda (M) Sdn Bhd in KL, M'sia, served a writ on the company to claim an amount of S$304,000 as additional consideration payable to Isyoda in relation of CSC's acquisition of G-pile. CSC is planning to hold a defence and resist the claim. More announcement will be made, they said. Hope they know what they are doing, because paying the legal fees plus the additional consideration of Isyoda will erode its profit (still don't know if they made a loss or profit).

Dow at 29 pts, europe a mix of red and green (those in red are not very red). More information on Dow will shed some light on its economic condition. I think the CPI is coming out this week for states. People are betting FED will reduce interest rates. I hope not...otherwise the big rally that follows will be followed by the big bad bear.

Boo hoo, got bullied by bear....portfolio loss is now 13k :(

Tuesday, August 14, 2007

So many companies reporting

Oh my, sooo many companies issuing quarterly reports. Too tired to browse thru all, maybe next time. I'll just summarise the main points for those companies I'm holding.

Pac andes
- Revenue up 42.5%
- Profit after tax 71.3%
- increased earnings from china fishery which posted excellent results too
- NAV $0.89 (way below market price)

- 1HFY07 net profit increase 7-fold (excludes exceptional gain of $12.7 million!)
- operational profit increase 133.7%
- gearing of 0.5 (so low for construction firm? that's good)
- improved margins
- order book as of june 30, 2007 is S$146 million compared to $147 million whole of last year

Straits asia
- reported in press media about its disappointing results because of the rainfall in indonesia
- revenue dropped 12.5%
- total profit dropped 39%
- dropped because last year was an exceptionally good year because lower than average rainfall whereas this year had higher than average rainfall
- strong holdings of US$15.98 million (enough to tide over their current woes)
- dividend of US 1 cts (around $15.20 per lot)
- force majeure expected to end by august 07 with recovery efforts undergoing now

More importantly, there has been 2 major factors that affect straits as reported here.

1. China decreased export of coal (possibly due to their increased usage)
2. Japan's damaged nuclear plant due to recent earthquake means they are using oil-fired and coal-fired stations to get their energy requirements

These lead to a shortage of coal prices. With increased demand from India and china (two developing countries), it's hard to see coal prices drop in coming years. Hmm, no wonder fidelity fund had been supporting straits asia despite the bad market sentiment. Straits is back to the price before day it announced force majeure.

STI was nearly flat today (+5) with volume of 2.5 billion. Construction counters rallied today, with major buying in this sector together with other pennies. All depends on dow tonight. When I came back, Dow was around -150 pts, but it went up to -83 now. Europe is red.

basketball...china transcom i sold at a loss ($330 loss) when i managed to sell of at 0.455. Who knows it went up to close at 0.500 today...what the hell...sianz. Haha, always got this somebody up there who just knows how to screw you up. Buy it dropped, sell it cheong, haha! Happened to you before?

Monday, August 13, 2007

Europe cheong ah!

Quite a number of companies released results today. I'll just talk about china transcom because I had this. Reason to buy is based on technicals. But when the subprime issue came, all technicals are thrown aside. I kept it because the prices are rather stable (very low volume in the first place) and wanted to sell on rebound.

Today it released quarterly results and not a surprise - just crap. Revenue dropped 22.9%, net profit dropped 55.6%. With no future prospects to jump start the price, I supposed the price will only drift downwards. When I bought it, it was based on technicals, knowing that the fundamentals suck. Maybe now is a good time to sell it. I would lose around $500, but it's okay. Even given this price, I wouldn't want to buy it, so why should I keep it further? Will look for opportunities to sell off this tmr.

STI went up 21 pts to close at 3380, with low volume of 2 billion only. Surprisingly STI was pulled up by property and banking stocks. Buyers are still staying on the sidelines, judging by the volume, so any rally upwards might be an opportunities to experience a more severe selldown.

Dow seems to be strong tonight (+88), Europe what's up man? :) Cheong up so much! Technical rebounds? Not sure about that, wasn't so in touch with the market these days as I SUPER DUPER busy. Look forward to October for my well deserved break in reservist....

Swiber 2Q results

Again, the results release of Swiber this morning caught me off guard. I wasn't even aware that they are releasing results today :P Good thing I bought in last week, haha!

Swiber released an excellent set of 2Q results this morning. The net profit yoy increased 678% and profit after tax increased 486.4%. Revenue increased 232% from last year. I'm not so happy to see that the gross profit margin increased from 19% last year to 29.4% this year. If other income (gain of USD $2.5 million from disposal of vessels) is taken out of the gross profit, gross profit margin is around 18 +%, which is around the same as gross last year's 19%. The fact that they release it in the press makes it all the more heady for investor who didn't crunch the numbers.

Cash flow is rather healthy after they disposed their vessels (USD $2.5 million ) and new bank loans of USD $17.5 million. A large portion of their cash (USD $15.5 million) went into purchases of plant and equipment (they increased their fleet of vessels) and additions to non-current assets held for sale (i have no idea what this is...this cost them USD $22.39 million). Despite their increased leverage position, their debt to equity ratio is 0.53 as mentioned by them. This looks very good. I initially thought they are going into debt to equity ratio of nearing 1, because of the aggressive expanisionist management and hence the need for more loans.

As long as their contracts keep coming in, I think it's not a problem for them. As the sector is red hot, I don't think that's a problem too. I would like to see more contracts coming in from regions in which they have not gained a foothold, like India and middle east. If they do announce such contracts or letter of intent, it would consolidate their position as the leading EPCIC contractor in this region.

As of June 07, Swiber has total outstanding order book of around US$218.70 million. Looking forward to more positive announcements from them.

Sunday, August 12, 2007

CHoffshore - great results with 4 SGD cts per share dividend

Don't know what tmr might bring. Dow didn't close too bad last Fri (-30 plus) because FED injected a fresh round of funds into the market to raise liquidity to prevent the collapse of the financial system. Hard to say how others might interpret this. It can either be viewed that the system is serious enough to warrant enough central banks globally to 'rescue' the system and thus it's bearish; or it's a temporary measure to halt panic investors from selling cheaply, thus it's bearish (at least for short term).

Not point theorizing, haha :P Tomorrow comes soon.

I saw CHoffshore results, it's really fantastic! Revenue was up 29.3%, total profit after tax increased 210.2% with strong core business earnings (52.8% of total profit) and from their continued disposal of their older vessels which had been fully capitalised (47.2% of total profit). They still have a couple more vessels to dispose of and this would add a huge chunk to their profits over the next few years (i blogged much earlier about this when i sold off CHoffshore in july).

They are proposing to give a special one-off divided of 3.5 SGD cts per share plus interim dividends of 0.5 SGD cts per share, totaling 4 SGD cts per share. This means $40 per lot. The price now is at ema 50 days support at 0.800, with next support at 0.735. Quite a good bargain if tmr there's another selloff :P Might not be able to get at this price though, knowing that they pay such a good dividend, hmm...

Next week should be another volatile week for dow. Quite a number of funds are reporting their reports for this quarter. Supposed to be bad (for those with subprime exposure) so will trigger more sell off and more of them will get liquidated until it goes bust. Excellent time to buy or last chance to sell? Haha :P

Have a great week ahead!

Friday, August 10, 2007

Market crash market crash! haha :P

Some big trouble is plaguing global markets. It's the spread of subprime problem from US to other parts of the world in the form of CDO. It's now spread over to Europe when BNP, France's biggest bank, stopped the withdrawal of funds linked to the subprime loans. Europe central bank had to pump in money to raise liquidity so that the banking system would not collapse. Europe is suffering from major crash now, FTSE (UK's stock market) totally wiped off 2007 gains after today's drop.

In the midst of all these, I queued for Swiber at 2.81, 2 lots and got it around 3 pm. The reasons for buying is that Swiber retraced to hit support at 2.81.

I believe 2.81 is a rather strong support and it should hold. 2.81 also happens to be the 61.8% fibo retracment level too, another reason why support should hold. Anyway 2 lots only, haha :) Swiber closed above my buy point at 2.86, so at least my brokerage is covered with a little excess.

Today STI held at 3300 support and rebound strongly towards market close. Rumors are flying around that MAS had injected money into the money market to prevent people from crashing the banking system. I just need an authoritative source to confirm that, because the news came from cna forum - bullshit forum, haha :) Never trust the information from there unless you can read it yourself from a link. Evil people there are known to manipulate and edit words from real reports to suit their case.

My losses still hovering around 11k, so it's ok lah. Stupid right? Bull market lose 30k, bearish market lose 11k :) Hhaha, take it with stride man :P Can lose $$, cannot lose confidence! Okay lah, enough nonsense, blog more towards Sunday.

Dow -112, Europe lau until intestines, liver, stomach all come out...

Thursday, August 09, 2007

O-oh....Dow's in trouble?

Tmr STI is going to fly singapore red red :)

News from BNP Paribas SA, France's biggest bank, had halted withdrawals from funds citing and the surging demand for cash drove overnight lending rates higher. This news sent Europe stocks falling sharply down (most are down 1 to 3%) as of now. Dow's future shows tonight Dow is going to have a rough rough night and probably will spill over some of its blood over to STI tmr when we open for trading.

Okay lah, used to it already. Always closed for trading at the wrong time. Tonight Dow should see major selling in banking stocks, and since yesterday's market was pulled up mainly by banking stocks, we are so going to see a major selldown in STI tmr. But must be ready for the unexpected, haha :P Who know if PM Lee's bullish national day rally speech might do for STI tmr? :)

No eye to see Dow tonight, haha :P Make a guess, -286 pts?

Wednesday, August 08, 2007

National day rally did happen! STI +111

What a wonderful STI national day rally!

I thought in the morning that it's all a fake rally, because it seems that the only stock rising are all those banking stocks that got whacked really hard during the market correction these weeks due to subprime exposure. But after they came clean with the exact amount of exposure (plus the fact that the risks are borne by global investors and not soley them), analyst came in force to recommend strong buys. So today, most of the property and banking stocks, in fact most of the other pennies as well, joined in the celebration.

Hmm, I didn't record down last year, did we have a national day rally too? I was too newbish to remember what is happening then. But yes, this year, we did have a national day rally. Conspiracy theory states that this rally is used by market manipulators to create a feeling of happiness in line with the celebration of the birthday of Singapore. Let this blog entry be a record in case next year or future years, I want to know what happens during national day, I can have something to look at.

STI rose 111.2 pts to close at 3413 with a volume of 2.4 billion (warning sign...too low volume? haha) with 751 gainers vs 157 losers. HSI close up 628 at 22,536, Nikkei close up 107 at 17,029, Shanghai up 11.9 at 4663.

I'm still in the view that we're not out of the woods, so even though my losses went back to below 10k, mustn't be too complacent and ya ya (arrogant) :P Was out at work for most of the day, so just came back and saw STI close with a loud bang :P haha!

GK goh released results today (I didn't even know beforehand!). Group's revenue rose 677% yoy, profit before taxes went up 2696%. Net profit from continuing operating activites went up 1678%. Why did the revenue went up so high? Their statements are not very clear, so have to search here and there for minute details. Revenue and net profit rose mainly due to gains on the Group's short term investment (includes 15.3 million realised and 4.8 milion marked to market portfolio value), as well as 7.7 million sales from long term investments. As these are one off events, if I subtract off these, the revenues is only 3829k this quarter compared to 4029k last quarter. So I wasn't too impressed.

Maybe its the nature of their business (investment company and stockbroking), so much of their income do not come from normal trading activites. I'm not sure about that, but I don't like it. Their 3rd quarter results might be affected because of volatility in the market (so they said under prospects of the company).

Happy to see that doubtful debts did not increase as much. Might not be suprising since their stockbroking business (revenue minus short term and long term = 3829 k compared to 4029k last quarter) did not change much. At least they don't have clients unable to pay up. Or maybe not yet since their quarterly results didn't include what is happening (due 30 June, before correction) for the last few weeks of correction.

Can also see their long term investment values increase substantially. But this is nothing, because when market crashes, all paper profit becomes a faint memory, unless they realise it by selling. Won't be too concerned about their long term investment assets increasing substantially. Cash flow deserve to take a second look because it dropped a lot. Too lazy to trace out one by one what is the cash sink, but from a brief look, it seems they spent quite a bit on long term investments. No problem with that, knowing their business is into investing other companies in the market.

Overall I feel GK Goh is okay, nothing to feel shout about and nothing to be alarmed in. If I'm still holding by next quarter, what I'll be looking at is whether their doubtful debts increased as a percentage of core business revenue. That should be an indication if the recent market crash affected their clients so much that they are unable to pay off their purchases (GK goh have to pay as a result, probably).

OK, that wasn't so bad right? Hahaha, finally can get to analyse their earnings report with more sense now! At least I didn't just look at revenue, profit after tax and dividend declared like what I did in the past, so that's an improvement :)

Ok lah, enough of now, too tired...tmr is another busy busy day for me. Since when did I work so hard? My goodness... Dow + 78, Europe all SUPER green! :P May Dow close nicely tmr night (not tonight), so that when STI opens on Fri, we can enjoy the post national day rally.

FYI, immediately after National day last year, STI close lower 0.8% and dropping the rest of the week to test ema50 days. Cross our fingers :)

Black Monday on 1987

"Technically, the crash of 1987 bears an uncanny resemblance to the crash of 1929. The shape and extent of the decline and even the day-to-day movements of stock prices track very closely."

George Soros in The Alchemy of Finance

This crash is the one which is closer to me as I'm in primary school. Of course I knew nothing about the stock market then and was more concerned with alphabets and numbers :P This crash occured on Monday, hence the name black Monday. If you read carefully and compare the present situation, didn't you find much similarities? Haha, there's always lessons to be learnt from the past.

Black Monday stock market crash of 1987

The stock market crash of 1987 was the largest one day stock market crash in history. The Dow lost 22.6% of its value or $500 billion dollars on October 19 th 1987! In order to understand the crash, we must first study the cause.

1986 and 1987 were banner years for the stock market. These years were an extension of an extremely powerful bull market that started in the summer of 1982. This bull market had been fueled by hostile takeovers, leveraged buyouts and merger mania. Companies were scrambling to raise capital to buy each other out, in essence. The philosophy of the time was that companies would grow exponentially simply by constantly purchasing other companies. In leveraged buyouts, a company would raise massive amounts of capital by selling junk bonds to the public. Junk bonds are simply bonds that have a high risk of loss, so they pay a high interest rate. The money raised by selling junk bonds, would go towards the purchase of the desired company. IPOs were also becoming a commonplace driver of the markets. An IPO is when a company issues stock for the first time. “Microcomputers” were also a top growth industry. People started to view the personal computer as a revolutionary tool that will change our way of life, and create wonderful profit opportunities. The investing public was caught up in a contagious euphoria, similar to that of any other bubble and market crash in history. This euphoria made people, once again, believe that the market would always go up.

Despite the strong economic growth, SEC was unable to prevent shady IPOs and conglomerates from proliferating. In early 1987, the SEC conducted numerous investigations of illegal insider trading. This created a wary stance from many investors at this point. Also, due to the extremely strong economic growth, inflation was now becoming a concern. The Fed rapidly raised short term interest rates to temper inflation. This, unfortunately, had an effect of hurting stocks as well. Many institutional trading firms started utilizing portfolio insurance to protect against further stock dips. Portfolio insurance is a practice that uses futures contracts as an insurance policy. People that hold the futures contracts can make money as the market crashes, offsetting the losses in the stock holdings. After interest rates had risen, many of the large institutional firms started using portfolio insurance all at the same time. The futures market was taking in billions of dollars within minutes, causing the futures market and the stock market to crash from instability. Additionally, common stock holders all wanted to sell simultaneously. The market couldn’t handle so many orders at once and most people couldn’t sell because there weren’t ANY buyers left!

Within one day, 500 billion dollars was evaporated from the Dow Jones index. Markets in every country around the world collapsed in the same fashion. When individual investors heard that a massive stock market crash was in effect, they scrambled to call their brokers. This was unsuccessful because each broker had many clients. Many people lost millions instantly. Some unstable individuals, who had lost fortunes, went to their broker’s office and started shooting. Several brokers were killed, despite the fact that they had no control over the market action. The majority of investors who were selling, didn’t even know why they were selling, except that they “saw everyone else selling”. This irrational mentality caused the extreme market crash. Most futures and stock exchanges were shut down for the day.

Around this time, the Fed started to intervene. Short term interest rates were instantly lowered to prevent a depression and a banking crisis. Remarkably, the markets recovered quickly from the worst one day stock market crash. Unlike the stock market crash of 1929, the market quickly started on a bull run, once again. This was powered by companies buying back their stocks that were undervalued after the severe crash. Additionally, the Japanese Nikkei index was embarking on its own massive bull market. This tremendous momentum helped pull the US stock markets to new heights never seen before. Some benefits came as a result of the 1987 stock market crash. For example, the circuit breakers system was implemented, which electronically stops stocks from trading if they plummet too quickly. This will prevent any future one day vertical drops, like 1987.

Once again, the remarkable similarity between all of the market crashes is striking. It seems that after all of the historical market crashes, people would learn to foresee a coming financial disaster. This rarely happens, of course, which is why there is constant opportunity for the smart money to prosper from the irrationality of other people.

Tuesday, August 07, 2007

STI fizzles off... damn bad today huh, despite Dow's rebound of 286 pts last night. Opened up 54 points but closed down 6 pts down, with volume of 2.5 billion.

Most of my counters went down again, esp the much battered construction counters. Simply no catalyst to push the price up, given the bad sentiment. But straits asia went up 0.050 after yesterday's announcement of fidelity funds increasing their stake. Swiber went down again...

Hmm, when will value investors come to rescue us? haha :) Only heaven the song goes...

I'll be extremely busy with capitalised E these few days. Holidays is not meant for me cos I'm actually busier. No time to look at market, no time to worry too, haha :P Might as well, given the state we're in. Are we going to have a NDP rally in the stock market? We'll know tmr :P

FED meeting tonight, see what kind of bullish or bearish undertone marks the statement of Ben. Interest rates is supposed to remain unchanged. Dow drop 12 pts, Europe all green :P

Monday, August 06, 2007

STI dropped 127 pts (3.70%) drop, volume 2.6 billion

After a big drop by Dow last fri (-286), STI followed, together with the rest of the bourses around our region. STI droppped 127 pt (3.70%) with volume of 2.6 billion shares transacted. The selling is a little beyond my expectation. I expected 70 pts drop, but it dropped much more than that. Resting on another support, so a rebound could be next to expect. Is it too much to ask for a national day rally? haha :)

Most of my counters dropped, as for all the rest of sgx stocks. It's 112 gainers vs 916 losers, so count yourself lucky if your stocks didn't drop. Nowadays really got no time nor energy to look at stocks. My work is really piling up on me, so seeing all the red ants crawling on my watchlist just makes me feel numb.

Maybe I should stop waking up early to check Dow's overnight closing and stop turning on my computer at 9am to check STI's opening. I'm like...a little burned out. My mind drifts to the batam trip I had recently, where I did nothing more than reading, exercising, sleeping and eating. What a life :P

Fidelity funds bought more of Straits asia since last week, so that probably explains why Straits price is supported strongly despite the bad market sentiment. They increase their stake from 5.01% to 6.45%. Swiber also had some news today. It announced that they acquired North Shipyard in Singapore to serve as marine hub for its growing fleet of vessels. Their rationale is that it is in the interest of the company to acquire the shipyard as it will complement the current activities of swiber. It also provide a marine base for Swiber's fleet of vessels. I don't expect any reactions from investors. Nobody would buy now :P

FED is supposed to have a meeting today to decide the rates. I suppose they would leave it unchanged and then hopefully they would hint on future rate drop in the coming months. Things like that can spur the market and turn it around. Dow +40 now, Europe mostly red.

Sunday, August 05, 2007

Market thoughts for the weekend

Dow dropped 281 points last Fri as some major market player commented that the credit problem is the worst he had ever seen in 22 years. Market plunged so much that trading curb was imposed. Sounds like Feb, when Thailand imposed some new rules and trading had to be halted in india's stock exchange or something.

Tomorrow going to see some major major selling, I believe, unless investors here and savvy enough to appreciate just how much a problem is their credit going to affect us. Yeah, liquidity going to be drained with more expensive yen but haven't it happened before? Never say this time the market is different, because human psychology never changed and so the mechanics of stocks will never change. It's always the same thing. As I put it before, how your investment portfolio is going to be like depends on what you do now.

Long time never draw charts for STI already. Let's do it tonight.

STI is resting on support level around 3430 (also 50% fibo retracement). It also opens high and close around that level. I do not know if it's a good sign or not. But if this support breaks, the next point we're looking at is a 70 pt down to 3360 thereabouts (38.2% fibo retracment). That should be about the point we're looking for tomorrow and I do expect that support to hold.

If not, a worst case would be to retrace to 23.6% fibo retracement at 3290, a 140 pt drop. Okay, that might happen, but I just don't think it'll happen over 1 day. By the way, 3250 is the ema200 days, if that one also break...bye bye STI! Not so unlucky right? Drop 140 points twice in such a short span of time? Haha :P

No eye to see :) haha...don't see loh :P

Friday, August 03, 2007

STI up 0.6, volume 2.8 billion

Just got back...woah..what a day :)

Had a pleasant surprise. Almost all my portfolio is up, and more importantly, seems like construction stocks are revived :) Could it be the big one this weekend? Hmm...wishful thinking ;)

STI had a funny candlestick. I believe it's a tweezer formation. Always close at a level for the 3rd consecutive day already. Could be in for a short rebound? We're still in downtrend and buyers had been rather hesitant to buy up the cheap shares, despite Dow closing rather well the last few days.

I'll blog more this Sunday.

Dow -33, Europe all red. Might be heading for another volatile week ahead. Have a great weekend ahead!

The Great depression in 1929

Market crash series...The Great depression of United states in 29th Oct, Tues, 1929. Otherwise known as 'Black Tuesday'. The ultimate bubble that ever burst, so severe is the depression that it spreaded over most of Europe.

Did the stock market crash cause the great depression, or does it merely herald the coming of the depression? Knowing that the stock market precedes the real situation by 6 months in advance, I think it's a warning sign that something is not right in the economy and not the other way round. Haha, my own thoughts only :)

To borrow from biblical text, 'work out your own salvation with fear and trembling'. Read and learn :)

The Great Depression of 1929

The 1920’s were a time of peace and great prosperity. After World War I, the “Roaring Twenties” was fueled by increased industrialization and new technologies, such as the radio and the automobile. Air flight was also becoming widespread, as well. The economy benefited greatly from the new life changing technologies.

As the Dow Jones Industrial Average soared, many investors quickly snapped up shares. Stocks were seen as extremely safe by most economists, due to the powerful economic boom. Investors soon purchased stock on margin. Margin is the borrowing of stock for the purpose of getting more leverage. For every dollar invested, a margin user would borrow 9 dollars worth of stock. Because of this leverage, if a stock went up 1%, the investor would make 10%! This also works the other way around, exaggerating even minor losses. If a stock drops too much, a margin holder could lose all of their money AND owe their broker money as well.

From 1921 to 1929, the Dow Jones rocketed from 60 to 400! Millionaires were created instantly. Soon stock market trading became America’s favorite pastime as investors jockeyed to make a quick killing. Investors mortgaged their homes, and foolishly invested their life savings in hot stocks, such as Ford and RCA. To the average investor, stocks were a sure thing. Few people actually studied the fundamentals of the companies they invested in. Thousands of fraudulent companies were formed to hoodwink unsavvy investors. Most investors never even thought a crash was possible. To them, the stock market “always went up”.

By 1929, the Fed raised interest rates several times to cool the overheated stock market. By October, the bear market had commenced. On Thursday, October 24 1929, panic selling occurred as investors realized the stock boom had been an over inflated bubble. Margin investors were being decimated as every stock holder tried to liquidate, to no avail. Millionaire margin investors became bankrupt instantly, as the stock market crashed on October 28 th and 29 th. By November of 1929, the Dow sank from 400 to 145. In three days, the New York Stock Exchange erased over 5 billion dollars worth of share values! By the end of the 1929 stock market crash, 16 billion dollars had been shaved off stock capitalization.

To make matters worse, banks had invested their deposits in the stock market. Now that stocks were obliterated, the banks had lost their depositors money! Bank runs started, where bank patrons tried to withdraw their savings all at once. Major banks and brokerage houses became insolvent, adding more fuel to the bear market. The financial system was in shambles. Many bankrupt speculators, who were once aristocracy, commit suicide by jumping out of buildings. Even bank patrons who had not invested in shares became broke as $140 billion of depositor money disappeared and 10,000 banks failed.

The 1929 stock market crash was beneficial for some, however. Jesse Livermore correctly forecasted the economic crisis and shorted. He made over 100 million dollars! Joseph Kennedy, John F. Kennedy’s father, sold before the 1929 stock market crash and kept millions in profit. Kennedy decided to sell because he overheard shoeshine boys and other novices speculating on stocks. Livermore and Kennedy were individuals are known as the “smart money”, who profit regardless if the market is skyrocketing or plummeting.

The stock market crash of 1929 launched the Great Depression. The Depression was the time from October 1929 to the mid 1930’s. Mass poverty occurred then, as many workers lost their jobs and were forced to live in shanty towns. Former millionaire businessmen were reduced to selling apples and pencils on street corners. One third of Americans were below the poverty line in the Great Depression. The Dow Jones finally surpassed its 1929 high, a full 26 years later in 1955.

The stock market crash of 1929 was identical to any other financial bubble. The classic pattern of extreme euphoria and irrational expectations will always lead to devastating financial crashes. Learning how to identify these timeless patterns will allow you to profit whether the market is rising or falling.

Thursday, August 02, 2007

Not out of the woods yet

Wasn't around the good part of the day, so wasn't aware of how well the market performs. I can see the STI close but it's never as close as feeling how well the market do by watching the movement of the counters. After watching the market daily for almost a year plus plus, I've acquired a certain sense of the market. By looking at how fast the price move or how 'fake' the buy/sell queue are, I can roughly predict how strong the selling/buying is. I guess that's called experience.

STI close up 3.8, on low volume of 3 billion. 343 gainers vs 524 losers. Basically all the big caps are the winners. Don't think we're out of the shit hole yet... just doesn't feel right. Straits asia rose up quite a lot today, dunno what's up. Construction also rose slightly. At least today didn't drop much, so margin calls and force selling won't drag so much into next week.

Again, tmr I won't be around to monitor the market for a good part of the day. Depending on Dow, I think might see another severe correction before we close off our worst week in this year? Haha :)

Can't really see Yahoo finance website to see how Dow is doing. Not so good the last time I saw...hovering around +4-5.

Got some news about the force majeure situation over at south kalimantan, indonesia. Another coal company, Thai Banpu declared force majeure over its coal at the same place after heavy rains prevented the mines from being in production. PT Bumi Resources, yet another company had its coal output cut by 60% due to the heavy rain. I think this might really raise near term coal prices up a lot due to supply woes.

Maybe this could be the reason why straits asia have been rising despite the market sentiment after its fierce selling down on Tues.

Wednesday, August 01, 2007

STI dropped 140 points!! (3.27%)

STI had a wonderful diarrhoea today, lao non stop till the intestines, stomach, liver and pancreas all lao out...gross right? At its height, STI dropped 140 over points, but a slight recovery towards market close causes STI to close down 115 (down 3.27%). This must be one of the most severe single day drop I've ever seen.

*bookmark this day - STI drops 115 (down 3.27%) on volume of 4.9 billion, with 101 gainers vs 1014 losers*

HSI also food poisoning, lao almost 950 points before recovering and close down 769 points. Shanghai dropped 3.8% down. Read below and tremble in fear :)

I bought some stocks. GK Goh hit my entry point at 1.22 before the big lau, so I entered 5 lots of it. Relieved that the price didn't drop much after the diarrhea. Swiber reached my target entry price (below $3) already, haha, should I?

What we are going to do now will determine how well out future investment will be like in the next few months. Lose $$ can earn back, don't lose confidence in the stock market, or yourself.

Let me relate an incident. I was jaywalking while thinking of the stocks today and was running late. While crossing the road (the road was jammed with cars from bumper to bumper), I was sliding in between the cars. Suddenly a motorbike weaved in between and nearly hit me. Nearly? It hit my forearm actually. It could have been my body if I didn't pause a little while to check if there's any cars.

I escaped with a little scratch but it set me thinking. A lot. I felt so much happier now and less stressful. Okay, initially I wasn't feeling unhappy but now I am feeling happy despite all that had happened in the stock market. That's the difference.

Morale of the story, my friends, don't be too caught up by daily noises. Spend more time with your loved ones and always make up on the day if you get into arguments. Always say I love you.

Okay enuff for charts, on such bad sentiments, no support and resistance works. I'm not going to monitor tomorrow and friday, so all the best! I'm still vested fully in the market, for those who want to know. Portfolio losses like hit a major artery, bleeding non-stop...currently losses snowball to $11.3k :) Smile lah, life still goes on :)