Thursday, January 31, 2008

History shall shed some light ; CSC won marina bay contract

Fed cut another 50 basis point, amounting to a total of 1.25% cut over the span of 2 weeks.

Did the market rally as a result of it? No, it didn't. In fact, I think it's slightly worse, if not a whole lot worse. But at least with the announcement out, there is less uncertainty in the market, and everyone will be less jittery, so that should be some consolations.

There are reports of bond insurers facing bankruptcy prospects. Basically, bond insurers are those that make the value of CDO, so if they are out of business, the worth of CDO will be much lesser, or worst case - nil. This means that those banks which reported substantial losses owing to subprime (hence, they own CDO) will have even more losses than expected, unless they had written 100% off the value of the CDO in which they owned. Since no banks will be so conservative to that extent of writing the whole value off, they will have to announce even more losses on top of what they have announced. This will lead to even more problems creating a credit crunch. That is, of course, the worst case scenario. The powers that be may step in before this whole episode spirals out of control.

History should shed some light. Just read how everyone is saved when long term capital management (LTCM) went bust. A bailout plan is announced in 1998. Goldman Sachs, AIG and Berkshire Hathaway offered then to buy out the fund's partners for $250 million, to inject $4 billion and to operate LTCM within Goldman Sachs's own trading. The offer was rejected and the same day the Federal Reserve Bank of New York organized a bail out of $3.625 billion by the major creditors to avoid a wider collapse in the financial markets. The contributions from the various institutions were as follows:

* $300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS
* $125 million: Société Générale
* $100 million: Lehman Brothers, Paribas
* Bear Stearns declined to participate.

In return, the participating banks got a 90% share in the fund and a promise that a supervisory board would be established. The fear was that there would be a chain reaction as the company liquidated its securities to cover its debt, leading to a drop in prices, which would force other companies to liquidate their own debt creating a vicious cycle. The total losses were found to be $4.6 billion.

Ironically, after the bail-out by the other investors, the panic abated, and the positions formerly held by LTCM were eventually liquidated at a small profit to the bailers. Some industry officials said that Federal Reserve Bank of New York involvement in the rescue, however benign, would encourage large financial institutions to assume more risk, in the belief that the Federal Reserve would intervene on their behalf in the event of trouble. Federal Reserve Bank of New York actions raised concerns among some market observers that it could create Moral hazard.

Sounds similar to the present situation? Another irony is that the ones who bailed out LTCM in the past are the very ones that need bailing now.

A few things to share:

1. CSC bagged the foundation works contract for phase 2 of the marina bay financial centre commercial tower. This is in addition to 3 other foundation works in the past three weeks - Alexandra Industrial park, Lonza Biologics plants at Tuas and public housing at choa chu kang/yishun area. Total contracts winning is S$118 million. Total order book stands at $448 million, most will be completed within the next 12 months. As of now, the group's revenue of S$185 million and PAT of S$20 million had already exceeded last year's revenue of S$127 million and PAT of S$9.3 million.

Price didn't change much though.

2. CFO of YZJ resigned. No reasons are given for it, not even the customary "sudden urge to spend more time with the family" is given. Is that bad? I think so. Wait for the bad news to come?

Dow is now -33 pts.

Wednesday, January 30, 2008

Singpost 3Q results released

Tonight is the important FED meeting results. I bet on another rate cut.

Let's not talk about the market today, it's boring as usual. Nothing is going to happen until the FED interest rate meeting is over, then after that, we'll cheong up and then sink. The question mark is whether we'll sink more than we cheong, haha

Singpost posted its 3Q results today. In summary, Q3 revenue grew 9.2%, net profit rose 7.8% and a dividend of 1.25 cts per share is declared, which is the norm. 3Q is traditionally the busier quarter for singpost, so the increase in revenue is nothing to be extremely proud of. Business as usual I suppose. What is a little worrying is that despite the rise in revenue in a variety of sectors, the cost increment is higher, hence the margins got eroded slightly by less than 1% comparing between FY07/08 3Q and FY06/07 3Q. A huge part of the increase in expenses comes from volume-related costs - comprising mainly of traffic and mail outsourcing expenses. Not too sure what is meant by that, but it's the greatest increment in expenses. Do singpost outsource mail? Maybe they do...

Operating expenses are broken into 3 parts:

1. Labour and related cost: up 10.6%

2. Volume related cost: up 16.5%

3. Selling, admin, depreciation and others: up 5.8%

It's quite encouraging to see that for the past 9 mths, the total revenue had reached 81% of the total revenue earned in FY06/07. If Singpost maintained the revenue earned for this quarter into the next quarter, the total revenue would have exceeded Fy06/07.

Having briefly looked through the annual report for Singpost in 06/07, I discovered a few things:

1. Lee Hisen Yang is sitting in the board

2. The net margins of around 30% for every quarter - it's higher than i expected

3. It's listed in 2003...i thought it's way much earlier

4. The revenue, operating profit, net profit, free cash flow and dividend is so consistently stable, showing a steady growth....but of course, this is their annual report. I have yet to calculate them myself.

They did mention about the challenges faced by the liberalisation of basic mail services. The margin pressure from market liberalisation and rising costs are their main concern. So what are they doing to prevent their margins from getting eroded?

They said they are going to focus on driving growth by

1. Growing their core competencies - which is their core business of mail and logistics

2. Leveraging their network - which is to offer higher value products and services, through their network e.g shopping through their distribution network

3. Extending their regional reach.

A very interesting thing they mentioned is that they will review its non-core business and will be exploring opportunities to unlock the value of SingPost centre (i supposed they are talking about their big HQ at paya lebar mrt there?).

A consistent dividend yielding company which still strives on growth...I like the idea. Need to evaluate whether they are just pacifying the concerns of shareholders or they really have a battle plan in mind.

Dow -33 pts now.

Tuesday, January 29, 2008

Flat-tish day

STI went flat today, changing only 0.34%. I guess everyone is waiting for the FED meeting that will start from today till tomorrow. Another rate cut? Nobody knows, but I think by looking at Dow tonight, we can sort of tell what to expect.

Been out the whole day. Saw a funny report that Goldman Sachs is recommending investors to sell Singapore banks on poor earnings forecast, haha :) Stupid will be happy to see this, waiting for DBAss to go down to $10 :) Haha, i'm waiting too :P

Dow future is now at +50. Let's see how it goes.

Monday, January 28, 2008

No time to stand and stare

Been quite busy these days, so hardly have time to do a quality posting or a good reflection of those books I've read.

I think by this week, I should be more free to at least do a reflection of the Investment Madness book that I've covered a week ago. Market is gyrating up and down with huge up and down movement. Haven't been looking at charts for some time, so I've got no idea where are the supports/resistances. I only remember that 3000 is a support level and the last low is around 2800 thereabouts. It's crucial not to break below the previous low.

Fengshui by Raymond Lo said that when the earth rat comes in, the market will be more stable and less volatile. It remains to be seen, of course, but we'll know soon enough with the chinese new year approaching in another week's time. In the meantime, stay tuned for more announcement by FED when they go into a two day meeting starting tmr and wed. Some say that they will cut another 50 basis point after last week's emergency cut of 75 basis point.

DJ stands at -72 now.

Thursday, January 24, 2008

Societe Generale have fraudulent trader?

Was out the whole day, so didn't manage to check the market till I'm back home at night.

STI was up another 2.2%, while HSI dropped 550 pts. Can see that quite a number of stocks went up in my watchlist. I wouldn't go to say the danger is over yet...we'll just wait and see. There are reports of a fraudulent trader under Societe Generale that is very similar to Nick leeson (the man that broke baring bank). I think that is another big blow to the market...esp to the financial industry. Seems like when times are good, there are a lot of such scandals and frauds appearing, even Singapore; the most recent being Sembcorp marine.

Dow is now at 58 pts up.

Thanks for everyone who visited my blog! My blog reached 22,000 views already! I've been blogging on a almost daily basis since I started bullythebear in around 2006, Dec. A very long time indeed. Many more years to come! :P

Why so serious?

Heath Ledger...passed off from this world on 23rd Jan, 2008, at a tender age of 28. While never a fan of his, I did watch most of his films out of sheer coincidence. These are the films he acted in:

1. The patriot
2. A knight's tale
3. Brokeback mountain
4. The up coming Dark knight, starring as the Joker.

I watched the first 2, missed the broke back mountain and am already eager to watch Batman before his untimely passing.

There's always a magic when someone died before his time. 'Before' his time? What is meant by that? A lot of people will say it's a waste of his talents. Even those canoeist who passed away are described as a waste. Are humans to be treated as a cog in the giant machine, to be used? I hate this kind of utilitarian viewpoint of human life. To see a death as a waste....i cannot agree. It depends. Some deaths will be mourned, some deaths are secretly wished for, some deaths you don't care and some deaths releases one from the suffering of this world.

But then again, Why so serious?

Wednesday, January 23, 2008

HSI up 2332 pts (10.72%)!!

STI rebounded a lot today, on news that fed had cut interest rate by 75 basis pt. STI went up 4.08%, HSI went up 2332 pts (10.72%). Haha, 10.72%!! I've never seen that kind of magnitude before...just imagine.

A few news to announce:

1. Cosco won more contracts, totalling US$422 million. This one is really a contract clincher. Every few months also got contracts. At the current $4.20, is it overvalued still? haha, don't know...never did find out.

2. China allows domestic banks to invest in singapore. Could this be the prelude for the QDII funds? But it didn't say when they can start investing. Anway, this could be the catalyst for the rebound of s-shares again tmr. Who knows...

Dow now at -115 pts. Let's see how it closes.

Tuesday, January 22, 2008

HSI dropped 2000 pts; FED's 75 basis pt cut

Market continued the downslide today. Let's take a look at the damage done:

1. STI dropped 50 pts to close at 2866 (1.76%) with a volume of 2.75 billion. Was much much worse, around 4-5% until the closing when it suddenly shot up.

2. HSI dropped 2061 pts (8.65%) to close at 21,757 pts. This is the single biggest drop i've ever ever seen HSI fell. Ever.

3. Shanghai dropped 7.22%, india at first dropped nearly 13%, then the whole exchange stopped trading. India ended up 8.65% down.

Brutal selldown. Haha, really the worst I've seen.

Fed held an emergency meeting to announce a rate cut of 75 basis point before Dow opens. Unfortunately, it didn't help stem the bleeding. OK, maybe a little. Dow is now at -240 (2%)...compared to everyone else, this is just insignificant. I think tmr might see a least a short one. Fed might cut more next week. Might.

Monday, January 21, 2008


This day I need to record it. It's very important.

This is why it's so important:

1. STI dropped 187 pts to close at 2917, dropping a total of 6.03%, with a volume of 2.15 billion. Gainers to losers is 153 to 711. Nowhere have I seen STI drop this much before. Eye-opener.

2. HSI fell 1,383 pts to close at 23,818, a total drop of 5.49%.

Dow is not open tonight due to a holiday. Massive selling, broadbased and relentless. This is really quite the worst fall I've seen. No reason why know, the market just fell.

Here's a few news to share:

1. CES was awarded S$188 million contract to build HDB housing in Queenstown. I doubt this good news is enough to jolt CES out of the current situation.

2. More selling by Capital investment on Singpost. From 12.9618 % To 11.9782 % through a series of transactions from 19th Nov till 17th Jan. I suppose that's why singpost fell so much as there are BB selling off.

Bank of America is showing report card tmr night, I believe. Dow is opening too. Might see another fresh round of selling. Let's see how low we can get.

Sunday, January 20, 2008

Robinson going be taken over!


ALF global wanted to buy over all the shares of Robinson at an offer price of $6.25 per share. The last trading price is at $4.46, representing a 40.1% premium! More details can be found here.

For this one, one must be able to hold for sometime, so definitely no contra. Queuing anybody?

Saturday, January 19, 2008


Just watched a movie alone at Princess cinema.

Some circumstances caused me to be stranded alone on a fine saturday, with no work and no date. I'm already spent working the whole week and I seriously needed some entertainment. Books would knock me off and anyway, I'm in no mood to read. I did the next best thing - watch a movie.

I chose Cloverfield because I do not know what it is. The poster entices me to find out more about it, though the wording "Some thing has found us" gave a huge clue as to the genre of the movie. But rest assured, this is no usual hollywood summer flick.

There is something about this movie that I like very much. The filming is not done in a God's eye view point, but rather, it is done through the eyes of a person holding a video cam, creating a rapid and frantic pace dubbed the 'Blair Witch' effect (named after a movie of the same title). I believe not everyone likes this kind of filming. I can vouch for it because one seriously f-up auntie yawned audibly and shouted to her companion during the show. Yes, shouted because I can hear clearly what she said. Another female told her male companion, to the effect of saying it's a waste of money.

I beg to differ.

This is one of the most original movie I've watched this year. It captures the very essence of citizen journalism. That was one scene in the movie, when the head of the above lady in the poster rolled out on the streets, possibly killing some citizens along the way. Instead of running, people are taking out their handphones and snapping pictures. I can picture myself singaporeans taking out their handphone and snapping pictures when there is something interesting happening. STOMP is such a hit here, which testify the power of citizen journalism.

Unlike in usual films, nobody has a clue what is happening to them. And you can empathise with the characters in the movie, who are somehow caught by up the action that unfolded unwillingly unto them. This crisis made the usual disturbances in their life so minute and small that it made me wonder...perhaps crisis are very important experiences. It humbles and re-prioritizes life. In the end, relationship is more important, perhaps more important than life itself. Do you have something that you always wanted to do but never put yourself to doing it while you are busy living life?

That's something to think about.

For all of you who thought of catching the movie. Pay attention to the movie's last scene, when the main character and his gf are talking to the video cam. Pay attention to the water in the backdrop.

Friday, January 18, 2008

Aztech ventures into construction materials??!!

Haha, what a surprise. I thought that after Dow's big diarrhea last night, i'll be expecting STI or HSI to drop a lot. It's surprising mild, or at least not as bad as I think. Perhaps the whole world is waiting for Bush and Ben to announce the economic stimulus package to see if it can save US from the recession.

An interesting news to share:

1. Aztech diversifies its business and is venturing into procurement and supply of materials for building and construction/infrastructure development projects. What a surprise!! Their net margin last year is 8.4%, so this year it should be lower as can be seen from their latest reports. I didn't expect them to follow the herd by going into construction line.

Two possible reasons for them to venture into something outside their field:

1. To generate more growth to keep shareholders happy. Perhaps their core business of IT goods are going to be eroded by the rising cost of goods (high wages in their plants in Dongguan plus rising yuan) and global slowdown in demand.

2. To extend the group's sources of revenue. To diversify. I wonder whether they are really diversifying or diworsifying..remains to be seen. If IT goods are cyclical, then construction is going to be cyclical too. Their reasons for wanting to get into this new venture is to capitalise on the high demand for construction materials driven by growth in Singapore, Asia and middle east. I hope they didn't bet wrongly.

Dow is up 75 points now. I'm down this week by around -9.4 k.

Thursday, January 17, 2008

Detailed fengshui analysis for the Earth Rat year

My special guest blogger, skyalps, wrote this summary of the fengshui analysis by Raymond Lo for the year 2008. Thanks pal, for the great summary on what to expect. Do your own analysis and research before committing your money, as always.


Personally, I found the talk quite interesting as I had little prior knowledge of Fengshui and Chinese Astrology. However, I noted that the examples he gave were typically those that had already happened and which he could use his analysis to explain why it happened. Therefore, do read it with a pinch of salt as it is quite general in nature and even he himself qualifies by saying that he is not a prophet and many things could affect the actual outcome.

Basically, his analysis of what's going to happen in 2008 is based on the theory of the 5 Basic Elements of Metal, Water, Wood, Fire, and Earth. In order to understand the order of nature, we need to know the order of the 5 elements which are:

Birth Cycle

Metal --> Water --> Wood --> Fire --> Earth --> Metal (repeat)

Destruction Cycle

Metal --> Wood --> Earth --> Water --> Fire --> Metal (repeat)

According to his previous talk in Jul 07, he had shared that the stock market would weaken in August and this turned out to be true (Remember the fall in the markets in Aug?). He said that 2007 was the year of the Fire Pig. The pig represented the element of water (Yin) which clashed with fire (Yang), as such the stock market was turbulent and unstable. The first half of 2007 belonged to the fire element which represented optimism and that was why the stock market rallied. However, from August onwards the water element came and cooled the stock market. Water represents fear and the month of December belonged to the water element which caused more destruction. Well, this was an interesting way to explain the volatile markets from Oct to Dec 07...

Now for 2008, the coming year of 2008 will be the year of the Earth Rat. Earth belongs to the Yang element while Rat is a water element (Yin). Again, this would not be a harmonious relationship as earth conquers water as you can see from the destruction cycle above. He revealed that the year of the Rat would be a year of false stability. He used the analogy of an ice-berg where you can only see the tip of the ice berg while the rest of it is submerged under the water. Using the element of earth and water, he explained that it is like a solid structure (Earth) floating on water where it is unstable and there are many undercurrents. He believes that the general outlook for the markets in 2008 would be less turbulent like in 2007 but the overall trend would be one of cooling down. He said there could be potential for positive action for the markets from Feb 08 onwards and especially for the months of May and Jun which would be very prosperous (Hold your positions now and start to load up after Feb??? Hmm...). However, he advised to be more cautious from August 08 onwards as the water element would arrive again and inject fear into the markets.

In terms of sectors, he believes the industries belonging to the elements of metal, earth, and wood would be favourable.

Wood: Publishing, Environmental
Earth: Property, Hotel, Chemicals, Mining
Metal: High Tech, Computing

The industries that are not so favourable are those belonging to water and fire elements.

Water: Transport, Communications, Shipping
Fire: Finance, Entertainment, Energy, Airline

Interestingly, he mentioned that the month of Dec 07 belonged to the Rat and water element. Therefore, he revealed that what happened in Dec and your luck in that month would give you a good indication of what was to come in the new year.

Whether or not you want to believe in it is up to your individual choice. As they always say, do your own research before taking any action. It will be interesting to revisit this in June 08 and see if what he had predicted had come true.


Today there is a big rebound..okay, maybe it's not very big. But it's a welcome relief nonetheless. Falling so heavily for the past few days, it's a welcoming sight to come home and see that my watchlist actually shows green counters! It's still early to say whether this confirms the end of the downturn, or the start of an upturn. For all we know, it could simply be a retracing before it goes further, since stock market do not go in a straight line down or up. Be cautious.

HSBC sank, then rose to touch 119.9 before closing at 119. 120 is a possible resistance level for now. Let's see how it handles 120.

ML just reported another 10 b loss...tonight Ben is speaking too. Dow futures stand at -25. Tmr finally ends this wild week for the year 2008.

Wednesday, January 16, 2008

Dividend yield for my counters

As promised, I'll do the yield for some of the counters that I had. Here it is:

1. Singpost

Singpost dividend policy is to distribute 80 to 90% of its net profit, or 5 cts per share, whichever is higher. Dividend history:

FY02/03 ---- 4.2 cts per share
FY03/04 ---- 4.2
FY04/05 ---- 5.0
FY05/06 ---- 5.5
FY06/07 ---- 6.25

My purchase price is $1.18. Based on 6.25 cts per share (1st to 3rd quarter 1.25 cts per share, 4th quarter 2.50 cts per share), my dividend yield based on purchase price $is 5.3%. Based on today's closing price of $1.06, the dividend yield is 5.90%.

2. Pacific Andes holdings

Hmm, didn't know their dividend keeps increasing over the years. Only realised it now.

2007 $0.0184 per share
2006 0.0182
2005 0.0163
2004 0.0125
2003 0.0110
2002 0.0100
2001 0.0150

Hard to calculate for this one because of the rights issue. My purchase price is $0.65833, so based on dividend payout of 1.84 cts per share, dividend yield is 2.79%. Based on today's closing of 0.495, dividend yield is 3.72%.


2007 ---- HKD $3.974898 (for 3 quarters only)
2006 ---- 6.314487
2005 ---- 5.661851
2004 ---- 5.142115
2003 ---- 4.662372
2002 ---- 4.133542
2001 ---- 3.743378
2000 ---- 3.392271
1999 ---- 2.642
1998 ---- 2.39
1997 ---- 2.14 per share

Since in 2007, the dividend of 3.974898 is for 3 interims, I need to make some approximation to the 4th interim. The last and final dividend is usually more, but in light of the current macro situation, I'll assume a linear projection of the 4th interim, giving out a total of HKD 5.299864 (3.974898/3 x 4) for the whole year. I bought at HKD 137, thus yielding 3.87%. Based on the same dividend but on today's closing of HKD 115, the yield becomes 4.61%.

If based on last year's dividend of 6.314487, the dividend yield based on my purchase price is 4.61%, while the yield based on today's close is 5.49%. BTW, HSBC paying out dividend today, on 16th Jan, 2008.

Will Dow continue dropping? HSI already dropped 1380 over points today. Fierce selling...haven't seen the likes of it for some time. HSBC i'll put on hold first. It dropped 120 already...might see it coming close to 110 or even 100.

Portfolio bleeding now..

(Why is my chatbox keep getting down? Anymore of this nonsense, I'll change it to a widget kind of chatbox. This cbox is getting on my nerves. And how did noob manage to type while I can't even type anything?! :) haha..strange.. )

Reminder to myself

Note to myself:

1. Do a yield calculation for all those counters that I had which gave constant dividend, using the price that I bought. E.g. Pac andes, HSBC, singpost

2. Do a yield calculation for all those counters again, but using the current market price

In times like this, moral conviction of your own investment is of utmost importance. Do I have what it takes to be a long term investor? To hold a counter so that it goes from profit to losses isn't something easy to bear.

Quite certain that HSBC is going to break 120. If it does, no point buying at that level. Keep that in view for now. I'll be blind (no market access) for the whole day, so I'd rather not queue first. I'll wait for my yield calculation to be done tonight. I need some conviction myself to buy when others are selling. This shall be one major test of my mettle.

C'mon bear, take me!

Tuesday, January 15, 2008

Did it struck you that the old STI is stuck at 3344?

STI crashed to know? Look at the magnitude of the drop of my watchlist, haha, can sort of feel the thing. HSI fell 630 pts, below 26,000. We might be in for some trouble.

Bad mood today. But it's not because of the stock market. It can crash for all I care. Stupid SGX, go and die lah, trouble everyone because of the new index. I wonder how international community view us - so many days the STI still stuck at 3344. Literally 'sheng sheng si si'. I think now is more 44 than 33.

SGX released its 2H results today. Didn't bother to read in detail, but seems quite alright.

My chemical romance: I'm not Okay

I'll stop here. Bad mood might be infectious. Take care.

Monday, January 14, 2008

Brutal selloff today

What a brutal selloff day today. I'm not going to quote the new STI anymore because I think it no longer represents the broad sentiment. It's a big joke when I see that the mass market is selling like 5% or more, STI only drops 40 over points. It's just pure crap.

Stocks after stocks, support gets shorted down again and again. It's been sometime since I've seen such fierce selling. HSBC still didn't close to where I wanted it to be, so no action today. Hmm, the short sell that I made last Fri...if only I had the proper instrument, I would have profitted handsomely. YZJ dropped 0.140 from last close.

Ecowise finally broke out of trading halt..lucky them, missed the whole action today. They announced a tie up with Holcim, one of the world's leading cement and aggregates suppliers for the purpose of maintaining and operating an industrial materials recycling and processing plant to recyle and process copper slag in Singapore. Interesting development.

HSBC support might be nearer to 123. I think 120 is still a good level to go in. More selldown tmr? haha :)

I'm going to be extremely busy the next 2 weeks. Might not have time to watch the market, better queue now, haha

Sunday, January 13, 2008

Book reflections on "Everyman and His Common Stocks" - Laurence H.Sloan

Another review for another book, titled “Everyman and His Common Stocks –a study of long-term investment policy” by Laurence H.Sloan. This one is a classic 1931 edition which I’m reading. I love the classics of investment – it marvels me that the advice dispensed out 70 years ago is as applicable in the past as it is now. The typeface, the long poetic sentences and the very polite way of phrasing ideas all contributed to my pleasure of reading such classics.

Here’s what I think is important in this book:

1. The 5 most essential tools in which an investor needs is the following:

a. Accounting – this is the language of business, without which, the information that companies present to you will be lost. This is so important I think it’s like the alphabet to the English language.

b. Statistic – nicely described by the author as the chemistry of arithmetic. With statistic, we transform raw arithmetic data and change them into use forms to derive relationships and patterns, so that one can forecast within a reasonable limit.

c. Economic analysis – Basically to interpret general business facts (like interest rates change, steel oversupply, wheat crop dies…) and apply them to more specific circumstances

d. Forecast – forecast is different from prediction or prophesy. To buy a stock and hold, one must have forecasted it to appreciate in value. Forecasting, I think, might be valuation in more modern context. Forecasting draws on one’s knowledge of economic analysis and statistic.

e. Recurring sources of factual information, and esp of interim information – I think easily the most important point to neglect. Check that your forecast is right on track. There must be a constant process to revaluate your holdings so as to decide the 3 important questions – buy more, hold, sell.

2. The purpose of a long term investment plan is to take some risk so as to earn higher returns than that offered by life insurance, annuities, savings accounts and high grade bonds. It makes no sense to risk more yet earn less return than these supposedly safer instruments.

3. Credit is the blood of a bull run. Anything that diminishes credit will dampen or kill off the bull. It interests me to read that in 1930s, the FED is already using interest rate to control the widespread speculation. They said that 6% interest rate will kill ANY bull. Raising bank’s lending rate to each other, raising loan’s interest, rising bank’s reserve…I think these some of the things that can be played around. I think it’s as relevant in the past as it is now.

4. The author mentioned a combination of low PE and high yield as a sign of an attractive market to enter. The high yield will ensure that the investor will get some income while waiting for more substantial capital appreciation. I think this point had been mentioned in a lot of books that I read. Must be quite important.

5. The ideal and most valuable security is one that satisfies the following criteria:

a. It must give the investor the most income (definition of income: capital appreciation and dividend)

b. The income rises the fastest

c. The income had risen over the most substantial period of time

6. Ideal means it’s a model. Investor should always adjust their portfolio to hold stocks that closest resemble the ideal stock. If the stock do not satisfies the ideal stock, then there must be compensation for sacrificing that ideal. For example, holding a high growth stock with no dividends…the compensation is that the growth will one day translate into earnings, which will raise the intrinsic value of the stock. Price will therefore follow, allowing the investors who sacrificed the initial lack of dividend for a substantial gain in capital appreciation. If one is holding a non ideal stock with no compensation of the sacrifices made in holding it, a rational decision is to sell it. An ideal stock in the past might not be in the future too, so constant reevaluation and reforecast is necessary.

7. The author talks about a particular period where there is a bad crash. Before that, he showed the headlines of the period leading up to the crash. He’s trying to show that there is absolutely no direct signs that point that the market is crashing. However, to a thoughtful investor, the signs are there. While one cannot predict the exact peak or bottom of a market, one can definitely see a region where the market is topping or bottoming out. Here, the author mentioned about the news headlines are lagging behind the stock market by 4 months. That means that whatever good or bad news you hear in the media must be discounted to the present by 4 months, since it had already happened. E.g. GDP, employment figures…

In summary, I think this book provides a very good reading about the intricacies of the stock market. There is more inside, including a very interesting part about how the BBs in the past do bidding up, bidding down and ‘make market’ for stocks. The details are incredible, if you can look past old fashioned language.

Ok, next book: Security analysis. Concurrently reading "Investment Madness - how psychology affects your investing...and what to do about it" by John R.Nofsinger. I'm reading the latter book to understand why I did that stupid trade on Friday. Mistakes are such a valuable source of lesson to be learn from that it's such a waste not to capitalise fully on them.

Friday, January 11, 2008

Stupid mistake made!

Today STI still can't be seen from yahoo nor poems. STI broke 3300 resistance to close down 24 pts at 3287 with a volume of 2 billion.

Did a stupid trade today. Out of nowhere I suddenly went to short yzj at 1.71, but had to cover at 1.73 because what I had expected didn't happen. I wanted to see yzj break support at 1.71, but it didn't happen. Grey said that my entry and exit points are cocked up; I totally agree. I shouldn't have chased it from 1.76 all the way down to 1.71. If I missed it, that's the emotional desire to short it, I increased my risk so much that the rewards isn't worth it.

I knew that my breakeven is 2 bids down, but that is my reward for pre-empting the breakdown of 1.71 support line. Heck, I should have shorted since 1.8 something when it broke out of the descending triangle...missed it, that's it. All the GREED, FEAR came out in me. I'm only glad that I realised it's a foolish deal and cut myself loose out of it before I lost more money and psychological edge. I felt immediately better. Why? First, I didn't hope. Second, I already know why cut loss in case it didn't happen to act according to my plan. Thirdly, I did cut loss.

Spending $170 for a whole year's worth of excitement should be worth it. I'm now more determined not to trade.

Market big sale today. Not a lot of stocks are left standing green, most are left in their pool of red blood, especially s-shares. Maybe pple are sick of QDII funds. Once bitten, twice they start to short, haha :)

HSBC dropping to 123.6 HKD. Dow -145 pts now on more writedowns to the tune of 15b USD by ML. Black monday next week.

Ecowise breakout

Esp for happy:

Nice breakout of ascending triangle formation by ecowise. Haha, actually break out happened yesterday but didn't realise that. Confirmed breakout with high volume (roughly 3 times average), with minimum target is 0.285.

Haha, Joshing went in at 0.250 (yst) and exited at 0.280 (today). Good trade.

Thursday, January 10, 2008

CSC better at PR now

Today is the debut of the new STI index by FTSE. Yahoo can't view it, Poems can't see it much for a good start. The new index closed down 33 pts at 3311 pts with a volume of 1.9 billion. Despite the big u-turn by Dow of around 140 points, STI didn't manage to ride on the wave. Again, we are still stuck in the descending triangle. With each successive rally, we're forming a lower high. Bad signs?

A few information to share:

1. Lianbeng announced its half year statements today. I think it did pretty well, with revenue increasing by 23%, gross profit by 206.8%, profit after tax by 285.5%. I did a pretty fast calculation of the gross profit margin (gross profit/revenue) and net margin (gross profit - operating costs / revenue):

1st half FY07 - gross margin 15.62% - net margin - 7.65%
1st half FY06 - gross margin 6.27% - net margin - 2.44%

Funny. Never expected construction to have a margin of 7.7%. There's a huge difference in gross margin, enough that a serious investor in Lianbeng ought to find out. Is it possible that the growth in revenue outpaced the increase in costs of goods sold? I do not have the answers.

Compare the figures with the few that I know: Popular net margins 4.2%, FJ ben around 5%.

2. CSC is gettin better at investor relations. They announced that they had, in the past 2 months, awarded approx. S$120 million worth of foundation and geotechnical engineering contracts from both public and private sector. These include:

Public sector -
1. Tree lodge for HDB at punggol west
2. City view at boon keng
3. Bukit merah
4. Fusionpolis
5. Sections of MRT downtown line extension

Private sector -
1. Reflections at Keppel Bay, waterfront residential condo
2. Hotel and commercial development at Collyer quay
3. Mont Kiara @ Eleven, condo in KL, M'sia

These bring CSC's order book to 330 million. Projects are expected to be completed within 12 months.

China milk hit my target at 1.25, exceeded at little at 1.26 before retracing all the way back to close at 1.15. Retracement to touch upper channel trendline at 1.11/1.12? Low volume too.

Dow futures down 18 pts. Ben is speaking today, if I'm not wrong.

Wednesday, January 09, 2008

STI survived 3300! (for now)

STI opened below 3300 (critical support!) and went to close at 6.26 at 3344 with a volume of 2 billion. It's great that STI didn't end up below 3300, otherwise more bloodshed we'll see. Agri stocks are still powering up...crazy wilmar, up 0.400 today.

Singpost had lots of selldown today, in huge volume of 1.3 to 2 million size. It's like 2 big bosses fighting to sell/buy, it's crazy. Went down to touch low of 1.070 before rebounding to close flat at 1.100. If it didn't close down, I see that as a strength. Chinamilk broke out..still no news of why.

Let's see how Dow perform tonight. If it's not ideal, might see 3300 tested again. We live in dangerous times :P

Book reflections on "The little book of Common Sense Investing" by John C. Bogle

Just finished reading “The little book of Common Sense Investing” by John C. Bogle, founder of Vanguard Mutual fund group. I think this book should be read together with Dr. William Bernstein’s The four pillars of Investing and Nassim Taleb’s Fooled by Randomness.

I really recommend the little book series for everyone – it’s so much stuffed condensed into a 8 cm by 10cm by 2 cm book. Almost every sentence makes me think hard. A couple of points kept me thinking:

1. A few risks to be aware of when one is doing individual fund selection.

a. Market risk – the risk that the overall market sinks, so your returns will also drop

b. Individual stocks risk – if one does individual stock selection, there is a risk that the few stocks chosen might do very badly.

c. Market sector risk – This one is similar to individual stock risk, except that it applies to a broader market segment. If say, during the subprime, financials didn’t do too well, and you invested in financial stocks that didn’t have anything to do with subprime, the stock will still undergo a selldown because of market sector. I think can be equally applied to regional funds. Think Japan funds.

d. Manager risk – bad managers, bad selection, bad fund returns.

2. The point that they keep drumming over cover to cover is to buy index funds and hold for long. By doing that, we eliminate individual stock risk, market sector risk (not regional market risk though) and manager risk – leaving essentially market risk. But holding long term sort of reduces market risk too. While historical results doesn’t mean future results, what we can gather from the past is that stocks had always been rising up, so it’s a good bet that I’ll rise up. Keyword: Good bet. Nothing is for sure (except death).

3. Overall market returns is essentially annual dividend yield PLUS annual rate of earnings growth PLUS speculative returns.

a. Dividend yield is more or less stable throughout the years, forming a core

b. Earnings growth increases or decreases according to good times and bad

c. Speculative returns also changes according to sentiment of overall market

4. The author’s point is that on average, speculative returns do not form a good part of market returns. Investment returns – dividend yield plus earning growth – are the ones that drive stock market returns over the long term.

5. Fund return is not investor’s return. Another equation to introduce: Investor’s return is Market return MINUS cost. Costs include expense, sales load, operating costs of the funds. The author is recommending low cost, low expense ratio, no sales load, passively managed (is there such a word?) index funds. He raised a good point that returns can be compounded…so do costs. So as investors, we must really go and hunt for a low cost funds (think fundsupermart instead of from banks). Oh, watch out for high turnover % in funds too, as all these would add in to higher frictional cost, increasing the costs further.

6. If one is hunting for funds, be aware of buying funds in the top few rankings. A few things to consider:

a. Once in the top tier rankings, it means that the funds had already achieved high returns. If you buy into the funds now, then there is a possibility of regression to the mean – meaning you’ll be buying at a high price. Risky business. First guy this year statistically finishes bottom next year.

b. Smaller funds have higher returns than bigger funds. That is the killer for large asset funds. Once they grow big to a certain size, their returns will drop. Why? 1000 to 2000 is a 1000 pt increase or 100% returns. 1,000,000 to 1,001,000 is also 1000 pt increase, but it’s only 0.1% returns. Think about that.

7. Buying index funds with low cost means that you’ll be getting very close to the market’s return. While you’re getting average returns, this beats a lot of actively managed funds hands down in terms of long term returns. Gunning for average turns out to be not so average.

8. Again, magic of compounding comes in. 8% long term returns for market means you’ll double your money in 9 years. So start now, start early.

I've never really mentioned this, but let me say it here. This review reflects my views only, I won't even pretend to say that it's John C. Bogle's view point. I read the book, tried to recall the main ideas of what he's trying to say in the book, and write this review based on my impression on those ideas. In other words, I could be way off the mark.

Tuesday, January 08, 2008

China milk bucks the general trend

Dow closed green yesterday. STI tried to, but failed in the end. Today STI dropped 14.8 pts, closing at 3338 with a volume of 1.88 billion. STI was doing well until after lunch, where a selldown over at Shanghai and HSI causes us to drop from the morning rise.

A few news to share:

1. Capitaland wanted to buy over the rest of Ascott. When it resumed trading today, capitaland dropped in price while ascott rose by 0.50. Obviously, investors over at capitaland must be wondering why they are buying over ascott at this kind of property bullrun? Perhaps they think it's undervalued? I've no idea, not much interest in their business anyway.

2. For skyalps...EMS directors are selling their shares ahead of the rights exercise? Saw a couple of notice to shareholders about the disposal of shares by one of the directors. While selling shares is no big deal (unlike buying of shares), it's the sensitivity of the timing. What would investors think if they see a director disposing shares? haha

3. CEO of chemoil KIA due to helicopter crash over at Indonesia. Not the first time since the start of the year. There was another announcement where the CFO of Baidu in China, died in a car crash too. All the high management level, pls be isn't condolences...

China milk chart above! :) Volume keeps picking up for at least 2 days already. Wondering what's up?

Dow futures up 72 pts. At least that guarantee a good opening.

Monday, January 07, 2008

China xlx awarded 100 most important industrial enterprises

What a big market selldown. STI dropped a total of 84.73 points (2.46%), closing at 3353 with a volume of 1.62 billion. All the big caps fell and from the viewpoint of my watchlist, it seems that the small caps are not spared either. Amid the selldown, china milk is about the only positive counter in my watchlist. Wondering what's up with that counter...saw a period of time where the counter shot up to a intraday high of 1.13 before closing at 1.090, up 0.010.

A few news to share about china xlx:

1. I never knew xlx stands for Xin Lian Xin :)

2. China xlx is awarded Henan 100 most important industrial enterprises on 23 Nov 2007. I think this is a confirmation of the size and ranking within its own industry...a confirmation that the company is there. Other than that, I'll be a little cautious about all these rankings because of the supposed curse involved. Haha, the curse is that those who are ranked 1st in any ranking tend to be the last next time. Go google sports illustrated curse to see what i mean. Perhaps this company deserves a closer look in its financial statements, instead of just the technical charts.

3. One of their products was also exempted from quality surveillance inspection, a testament to the long term quality assurance, market share and comprehensive quality control systems china xlx have in place. It also passed 3 consecutive times for the past inspection test. Hmm, interesting..

Agriculture leads to fertiliser? Another theme to play on in the near future with rising agri commodities?

STI's chart is shown above. Looks more like a descending triangle than a symmetrical. Either case, it's critical not to fall below 3300, otherwise we could be seeing more bloodshed. I don't like the increasing volume while STI falls.

HSBC comes nearer and nearer. I think must use dbs vickers to observe the live prices for it. As long as it's near 120 to 122, I think i'll grab it.

Dow +40 so far.

Sunday, January 06, 2008

Buy and hold forever?

HH passed me an excellent article on buying and hold fallacy which I linked it here.

The idea of buying and holding is what long term investors would like to do. Before anyone just go to the stock market and buy anything stocks, and proceed to hold it forever, I think here's a few pointers to take note:

1. Buy and hold works good for companies which are fundamentally sound. I think before you adopt the buy and hold strategy, you must decide whether the company will still be around for long and whether the company can still make money in the future. It still boils down to analysing the business. But jeng told me an interesting thing, economy changes every 5 years or so, thus there is no need to look for 10 years data since the company might be a very different one 10 years later. A good example is GE, this is one company that continually changes according to the demands of the world. Did you know that Thomas Edison started a company that eventually became GE? That was way back in 1890s. Or locally what about Eng wah...who would have though that they changed their core business of movies and went into biotech last year?

2. Point one talks about survivorship of the company. Point 2 talks about survivorship of the industry. Who knows what might happen in the future? Would we enter a time where genetic manipulation is so rampant that we can engineer ourselves not to grow beard, thereby putting Gillette out of business? Or we ran out of oil and all the refineries like SPC, Exxon-mobil, Shell go bust? We cannot foresee what will happen in the future...perhaps the next biggest sector to look out for haven't been invented now. Think cryogenics and outerspace travelling.

3. Buy and hold is good if you have a margin of safety. Holding when your entry price is very low gives the holder a sense of security and quiet confidence. Imagine buying at a high (trading buy) and holding it for long. Anyway, margin of safety doesn't guarantee good returns (though it usually does), it just increase the safety of our capital.

4. There is a time to sell for long term investors. The time to sell is when the stock reaches its fair value. I might have more to say when I know how to determine the fair value in the first place. My idea of it is to determine a fair value, say 100%, then proceed to buy at 40% to 60% (your margin of safety), then sell at 100% when the catalyst comes in.

But the article did raise a certain point which I find interesting. The hottest stock now - Berkshire - might not be the hottest in the future. Who knows? I guess instead of buying and holding individual companies and take the risk, perhaps a less risky approach is to buy index. Buy and hold index I mean. Then again, who knows? Historically stocks have always go up despite the fluctuations and market crashing events. We would never know if the stock market will always go up or it haven't come down.

To summarise, just keep an open mind. Question your assumptions periodically. Nothing beats an open enquiring mind.

Saturday, January 05, 2008

Review on "The Dividend rich investor - Building wealth with high-quality, dividend paying stocks"

Stupid advertlets...they never pay money to host their site, so when I logged into my blog, I kept on being directed to another site. Haha, looks like they owe money run away already...

Enough of that.

I finished reading the dividend book...managed to complete reading it in a day. I never knew I could squeeze so much time if I had to, though it is quite tiring. These are the few things I thought it's important:

1. Instead of calculating % yield (formula: dividend for whole yr/current market price of stock), we can calculate the % yield relative to cost price (formula: dividend for whole yr/price at which you buy). This means that after you buy the stock, the share price will not change anymore.

2. It is possible for the dividend paid out to be equal to the price of the stock after a period of time. That means that if you buy and hold while getting dividends invested throughout the years, it's possible to own a stock for free. I think it's almost like buying a property - rental collected will pay for the mortgage until it is fully paid for. In which case, the property becomes 'free', yet it can still generate income for you. Robert kiyo's favourite.

3. Be careful about buying stocks just for its high yield. High yield happens could happen because there is some trouble, so the share price drops, bringing up the yield. Yield could also be high because the dividend paid out is very high, perhaps due to divestment of business or some other one off event. If it's the first reason (share price drops), then we have to analysis whether the fundamentals is still sound. A good example would be the subprime issue, where a massive selldown cause a lot of dividend stock to reach sky high yield (10% to 12%, I heard for some REITS). This is where a cool head should analyse to see if the selldown of the stock is due to external or internal problems relating to the stock itself. If it's the second reason (high dividend payout), then usually the price will rise to accomodate it...if the price didn't go up despite the announcement of high dividend, ask yourself why. In summary, always find out why it has high yield before jumping in. It just shouldn't be the only criteria to invest.

4. The book said that ideally, before investing in divided yielding stock, we should check a few things.

a. payout ratio (formula: dividend payout/total earnings) - check payout % against industry's average to see if it's on the high or low side. This is to get some clue as to how sustainable the dividend is. If it didn't give any clue on that, at least you'll know whether it's on the high or low side of the industry.

b. cash flow - ideally should be 3 times the dividend paid out per annum. I do not know why 3 and not 2.5 or 4. Perhaps the rationale is to ensure the sustainability of the dividend again. I heard of companies with liquidity problems but they still borrow to give dividend. Or maybe high earnings, low cashflow, but still give dividend...

c. P/E ratio. Can't really remember what is said for this as my mind auto shut down when I see PE. I think the point is to link the yield to the earnings. You know, high yield could be low price, but if P/E is very low, might mean a bargain. MIGHT.

5. A few sectors give good dividends. Financials. REITS. Utilities. These are the 3 that I can remember. But each one have different characteristics...have to examine more in detail.

6. We can use dividend yield as a gauge to whether the stock is over or under valued. But firstly, we need to find out the historical high and low yields. If the yield currently is high (meaning price is low), then value hunters will step in to support the stock. If the yield is low (i.e. price too high), then it might be a overvalued, consider selling?

7. Dividend yielding stock give two kinds of returns to investors: dividend and capital appreciation. In bad times, where capital appreciation is put on hold (a more likely case is capital depreciation!), the only way to earn from the market is from dividend. Price might drop but it will be supported at some point because the yield becomes higher and higher while the price drops. Growth stock without dividend might not be so bear-proof. So even in bear market, total returns of a stock might be 1-2%, also better then nothing.

8. To find out how long it takes for x% returns to double your money, use the rule of 72. Take 72 divide by x - that will give the number of years to double your money (assuming reinvested and compounded annually). To find out how long to triple your money, use the rule of 115. Take 115 and divide by x.

Magic rate is 15%...because at 15%, 5 years is all it takes to double your money. 7.7 years to triple your money. No joke.

That's all I can remember.

Today I bought Security analysis from MPH, because when I tried to order from Berkshire business books, they told me it's out of print (and have to ask the publisher to print it!). That will take 1.5 months and above. It's not acceptable for me, so I grabbed it from MPH. It's not an easy read, from what I see.

Going to read "The little book of Common Sense Investing" by John C. Bogle. Know who is he? He's the founder of Vanguard Group, a fund house in US. Can't remember whether I've read this book...good to re-read this again even if I did. Perspective is definitely different for me this time round.

Friday, January 04, 2008

Capricorn is capricious today

Today is 4th January.

Don't feel particularly good about today...I seldom feel happy this day. I lived for 30 years, 16 years to educate me (6+4+2+4=16), 6-7 years don't know what I'm doing, minus 2.5 years NS, leaving only 4.5 years of purposeful, free life. 4.5 years of freedom, after 30 yrs of life...that's unacceptable, that's pathetic. I started investing 1.5 yrs back, probably going to do so till I passed from this place. Why didn't I start earlier?

Does it matter if I start earlier? Perhaps not. I couldn't possibly see myself as mature or sensible enough to do what I did back then. Investing earlier could possibly kill me. Not too late still, I think. It's never too late. If one is serious, 1 yr can be equivalent to 10 years of non-committal experience.

HH sent me this website for calculating your personal ROI to achieve a certain return by a certain time. If I aim to hit $1,000,000 by 50 yrs old, I need to start getting a return of 13.4% starting this year. Achievable? Yearly might be hard...but over a span of 20 years, I think an average of 13.4% is something I should aim fact, exceed. Grim maths indeed.

Before this bad mood infects everyone else, I better stop. My horoscope says that I'm a Capricorn. Capricorn Capricorn...Capricious? Crapicorn? I better stop here.

Dow -110 now. STI went up 40 pts on a sudden reversal (up 1.20%) with a volume of 2 billion (this is much higher than the 1.3 to 1.5 billion volume). HSI also went up a lot...600 over points.

Thursday, January 03, 2008

Construction stocks bucked the trend of falling STI

STI tanked down today...dropping 1.85% (64 pts) to close at 3397 with a volume of 1.5 billion. All the big shots are shot down...DBS, SGX, Kep, CityDevlop, SIA...dragging STI down in the second day of trading for this new year 2008. Could the party be over now? Don't want lah, I'm still hanging over...

Construction stocks is definitely heating up. While STI dropped, construction stocks are the ones that bucked the trend. Those in my watchlist, CSC, Koh Bros, LB, YN all went to close positive. LB and CSC are broke out of downtrend with higher than average volume, despite the overall bad market sentiment. Could be looking at contract wins...waiting for trading halt.

My portfolio was pretty okay despite the selldown today. Basically from -500 to -1000 only. I think my counters are well supported (also goes to show that I didn't buy at high anymore). I'm actually quite unfazed by all these movements, which is so much different from the past. I think that's a good sign.

HSBC dropped to HKD 129.50. My plan is to add in more when it reaches 120. As for CSC and YN, I plan to sell half upon breakeven and depending on market sentiment, I intend to cut all. Don't care so much about the gains, I'm focusing on protection of capital and holding cash for the big big sale ahead.

I think that's about it. Good luck!

POEMS Money Market Funds (MMF)

Seems like quite a few are interested in the Money market fund (MMF) that POEMS offered. Want to share what I thought about it, including some details after tracking it since May last year.

A short introduction on MMF. It's something like a unit trust that do not guarantee the principal. However, it invests in low risk short-term deposits and high quality debt securities. You can do an EPS to POEMS and they would put the money into the MMF. Basically once the money is in, they would buy as much units as your money allows (there is a minimum of $1000 before they can start buying though). The bid price in which you enter can be seen by clicking ACCT MGMT then ACCOUNT DETAILS...look for the MMF (Bid price). I've been tracking the MMF bid price since I had money inside...that was in May 2007. Here's the data:

It's a pretty long one I know :)

Take note that I only update the table if I see that there's a change in the bid price. Otherwise, I won't update it. I've tallied up the monthly % increase since May, so here's the results:

May 0.17%
June 0.18%
July 0.17%
Aug 0.20%
Sept 0.16%
Oct 0.15%
Nov 0.15%
Dec 0.14%

This means an average monthly % increase of 0.17%. If I annualised it by dividing by 8 and multiplying by 12, I'll get a rate of 1.98% per annum.

To look at historical performance, have a look at this website. It shows the performance since inception. 2% per annum to me is a much better deal than putting it in savings account, earning you a miserable 0.25% per annum. Of course, putting money into MMF won't make you rich (gosh, it can't even beat inflation at 3% average), but it does serve as an alternative savings account. I tried before, it's highly liquid...within 1 to 2 working days I can withdraw the funds by clicking an online form in POEMS website. According to them, if instruction is given to withdraw funds before 0930, the money can be sent to you on the same day. If not, it's the next working day.

Beats fixed D to me too, because there is no lock in period nor high minimum deposit (only $1000 to start the thing going).

Pls decide carefully before going in...I'm just sharing what I know about this product. Talk to your broker/financial advisor before jumping in. There are certain risks involved in putting your funds in MMF (I didn't put in all my funds).

Construction stocks making a comeback?

Constructicons making a comeback? Check out some of the charts I did this morning on the construction counters :)

Really really hoping to sell it soon :) All the rally had died down since this frenzy in buying up in the morning. Could be seeing a few more rounds. When the top 4 volume consists of construction stock, you should know that this sector is coming. Why? I think must be news of contracts... let's see if it proves right.

Wednesday, January 02, 2008

CES won a contract in Vietnam...could it boost construction stocks?

STI closed down 21 pts at 3461 with a volume of 1.4 billion. First trading day of the year we already have a negative day. Market volume is still quite low, nothing much to see actually, perhaps except for Chip Eng Seng which won a residential development contract in Vietnam. Construction stocks pushed up a little because of the news. That was pretty much it.

Actually from my watchlist, I can see a number of stocks go low then close flat. I think it's a good sign that they didn't get lower. Must see how Dow far not good.

I just saw that Swiber could be having a nice pennant formation. A nice long flagpole followed by a retracement which forms the pennant. Could have huge upside if it breaks 3.52 convincingly. Weekly chart might be able to support that idea of a breakout of flag formation. Looks good :)

CSC also looks fishy. Why is there a spike up in volume today? Symmetrical triangle...if it breaks 0.330, I think we can see it going towards 0.345 range.

Below is the chart of CHoffshore. Interesting chart, can study it, but I'm not buying anything for now, haha :P

Dow is now at -109 now, haha :P Looks like tmr we can see more downside of STI. Remember the rule of Jan's first 5 days? It'll determine the whole year's results (most likely).

Tuesday, January 01, 2008

Chairman's message for FY 2007

Dear Shareholders,

Today is the first day of a brand new year 2008. I thought it's an excellent day for me to reflect what had happened in my life for the year 2007. Time flies so fast...

Let's recall what happened on 2 Jan 2007. I closed the year 2006 with a $3500 total returns. Considering that I started investing/trading in April, I'll say I had an excellent year in 2006. In 2006, I lost 18k and regained all of it back, mainly by trading with HSI warrants. In 2007, I closed the year with a loss of $485. This is the year that I suffered a huge loss of 30k (again, because of my warrant trading). It's very good that I managed to narrow down my losses to a mere $485, and I'm very glad that I learnt a lot of lessons during those troubled times.

(I did not include my hsbc portfolio in my returns as I think it will prevent me from doing stupid things. HSBC is part of my super long term portfolio...I thought it'll be good if I separate it from my 'play' account. For HSBC, I'm currently losing nearly SGD $400)

Overall, my returns since inception is still positive $3000.

I'll be revamping my portfolio spreadsheet so that I can track my ROI% better. Now it's a total mess, haha! Let's see some of the statistic of my trades for this year:

1. My warrants trades for 2007 gives a ROI of -5%, amounting to a total loss of $11,400

2. Out of 25 warrant trades, 16 trades gives positive returns. That means I bet correctly with a hit rate of 64%.

3. However, my total gains for my winning 16 trades is $3596 while my total losses for my 9 losing trades add up to -$15,027. What does this mean? It means that I didn't know how to cut loss properly. If I had controlled my losses and had the discipline to cut my losses before it snowballed, I would have been able to have a better ROI% for my warrant trades. Expensive lesson for me, I must say.

4. Worst trade in terms of ROI% is HSIsgaeECW070330R - a HSI call warrant. It clocked up -65.3% losses with a monetary value of -$3,330.

5. Worst trade in terms of monetary value goes to Longcheer holdings. Excluding dividends, a loss of $10,092. Total returns (including dividend) is -$9,534. Nearly -40% ROI...ouch :(

6. Best trade in terms of ROI% is YN W121214 - yongnam issued rights warrant which I haven't sold off yet. 203% ROI returns, with a monetary value of $183. For the best realised trade (meaning I have sold off and realised the profit), it goes to Straits Asia Resource. 115% ROI with monetary value of $6657.

7. Best realised trade in terms of monetary value still goes to Straits Asia. Best trade so far is Swiber....$22,400, with a ROI of 120%. Swiber single-handedly wiped off a big chunk of my 30k losses.

A very humbling 2007 for me....where I learnt the hard way what is the difference between skill and luck. A few hard knocks is actually a good thing as it inculcates a healthy perspective of the stock market, provided that you did not give up and treat it as all as a good experience.

Blogging is one of the most memorable thing I've done in 2007 too. Bully the bear started off as my online diary. At that time, I was started a blog to sort out my thoughts about trading. At that time, I just started on technical analysis and was exploring how to view all the charts to make my warrants trading better. I don't believe that if I keep using all the chart and write about it daily, I couldn't get better. I was proven right...I did get better over time simply by reading charts consistently and persistently. But my knowledge is fragmented and it was until my fren LS asked me to go to Decipher's course that I really began to integrate all the pieces into a more coherent framework. That was way back in January 14.

I started losing more after Decipher's course. This is because I thought I'm so good already, so I ya ya papaya and started trading based on rules that I barely know on the surface. Skill vs luck ran out and my skill wasn't there, so I started losing pretty badly. I think I reached my emotional trough somewhere around Feb 12. Some close frens thought I'm writing a suicide note or something. That woke me up. Money is just money. I'm poor but I'm wealthy.

After that I started revamping my portfolio...sold off longcheer plus a host of other stocks that are lousy but I'm still carrying. Without the baggage of my past mistakes, I started reading up intensively. I'd probably read close to 30 books in 2007 on all areas related to investing. Life was never the same after that.

Bully the bear blog grew in viewership and unique visitors. From a low viewership of around 100 plus in May, it grew to a peak of nearly 10,000 in December 2007. A lot more features are also included, including ads and an increasing number of interesting blog sites to visit. The chatbox is the most wonderful things I've done...I made quite a number of friends and met a few too :P It's the sharing and good comradeship in the chatbox that made Bully the bear such a addictive place for me to blog again and again daily. Thks everyone!

I better capture a screen shot of bully the bear website on 1st Jan 2008. I think it'll be very interesting to see how the site evolved over the years.

More things to come for bully the bear blog in 2008 :) That's for sure! haha :P I invite everyone to stay on and let's huat together in 2008! Have a wonderful and fulfilling new year!

La Papillion
Executive Chairman