Friday, July 20, 2007

What a week...cheong down cheong up

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

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

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

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

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

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

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

We'll worry about that when it comes :)

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


linda said...

I like reading your blog, be it for stock ideas or pure reading pleasure. What disinguishes your blog from others are the past events you posted. I find them good reading material and useful to know. I wished I had stumbled on your site earlier, but it is never too late. Keep up your good work. Thank you.

Lim said...

Thks linda! The market crash series is a very recent addition of mine. I am interested in posting those past market crashes because human psychology never change, and from history we will learn the signs of the next crash and hopefully, avoid them.

I'm very encouraged and glad that you found it interesting, as it is to me :) Thks for visiting!

la papillion said...

haha, sorry, forgot to change the user name as I'm not using my own computer. lim is actually me, la papillion :)