Transactions Dec W2 - oil

Oil dropped from a high of 147 to a low of last week of 40 a barrel.
It then went up about 47 dollars last week. On Friday last week it dropped to 44.7 (Dec contract) and 47.75 Jan Contract due to the saving of Big 3 automobile manufacturers did not go through in congress.

This was my thoughts - they will definetly pass them, Tuesday Fed will cut rate, Wednesday OPEC issued that they will cut supply heavily to balance the ideal price for oil.

So I bought on weakness, with Friday night ending at 46.7+. Monday it rose to above 50 dollars but crash downwards after US release dismal manufacturing data 45 dollars +. Tuesday Fed cut rate to 0.25. Initially it rose, together with US stocks market hitting 4-5%. However, oil slid further to 43.8.

What the heck, Wednesday when OPEC agreed to its biggest supply cut ever (2.2 mill barrels ), it rose a bit then tanked further. Wednesday was my trading date to pull out. Before the OPEC meeting, I just put a price at 47.8 and it got hit.

I was lucky to scrap this flat. From how I see, speculative trades are still in play. with Dec futures ending that week, most people are closing their positions. So we see a long squeeze andthere is a big gap in the next month's contract. (<3-4 dollars)

Lucky in the sense that I initiated the later contract, which was not played that badly and did not fall badly. Things to learn is that 1) I should still monitor US economic news. 2) I should learn to grap big profits even though I have a deadline to exit.
Things that I did well... at least I cut before the OPEC announcement.

Another bad move, the Singapore Share I shorted is Wilmar. Why ? Because it did not decline as much as other blue chips, and palm oil prices are down by more than 50%. Its results have been supported by financial hedging and not real profits. Anyway as I expected oil to rise, I close this at a loss 2.9 fr 2.65.

I am waiting for the automobile bailout and rise in Euphoria to short again.

Last Friday as I was going on a trip, I place an order as I believe it will drop further and I think with the recent rally, it has some sufficient margin. The automobile bailout came that night, too bad, US market rose about 2% but ended flat.

Lets see how things play out.

thoughts on crisis

1) Many countries are spending huge on infrastructure
Developing countries will benefit more from this. Why ? Infrasture building will create jobs for devleloping countries, and once these infrastructure are up, they will support growth for other industries eg. airport -> Travel, highway -> Trade ,ports->trade etc
How would Developed countries benefit, as I can see nothing much. first, jobless bankers will not be construction workes, 2nd infrasture building have less effect on future growth in other industries.
That is why I am holding tight on my China shares.

If I was the govenment in US, to stimulate growth I will be investing in high tech R&D, alternate energies, space travel (new industries) etc.

2) Companies now should be relooking into their business, shortening their account receivables,wary of giving too much credit (means that companies are lending money), credit reviews on customers which are in bad financial shape.

3) An interesting thing now is that alot of companies convertible bonds are trading at discounts on the dollar. For example, Noble which issued bonds at a high price, can pay a discount to buy them back. This mean that financially stronger and more sound companies can buy back their bonds on the cheap. I will do more analysis on Celestial bonds on a later stage.

4) This recession is set to last as banks horde cash, drying up capital to business. Credit card crisis will hit next year.

Transactions Dec 08 W1

I closed my shorts in early november at 919, and was resisting it (S&P is down 34+ % YTD) . It was a horrid Sep & Oct. However, S&P US market went down further, excaberated by the financial worsening. The auto big 3 companies in US was also facing bankruptcy. I expected them to be bailed out, but as always, the US congress needed some fighting before it got approved. S&P sank to 750+, just before I left for my trip. WHen I came back, it was going up almost every day (5-6 days continous) till 890+.

I shorted 10 at 870 on Monday evening. I was deliberating till the evening as I was busy with work to think through. But after going up for so many days, it was ripe for a fall. US unemployment figures was going to be released on Friday.

Monday dropped 8+% wipping of most gains the last week, Tuesday, it did not break and recover to 840+ and Wednesday 870+. I was thinking of covering, but heck wait till the unemployment data came out. Thursday it drop to 848 which I covered 5, and covered another 5 at 828 once the unemplyment figures came out. It was expected bad, and I quickly covered the rest. As expected, US market rallied on bad news to close at 870+.

I have to be very careful with shorting.
i) The market is now rallying on bad news with the short term low at 750.
ii) I expect the auto makers to be bailed out
iii) Obama wants to spend the greatest amount on infrastructure - Deficit is not important...big words
iv) 22 Jan is Obama ascendancy to his presidency... I expect a good rise till then
v) I find that those who have sold have already sold already, leaving inexperienced shorts.
vi) Things are likely to get worse with more bankruptcies on its way
vii) Just some personal feeling, experiencing the Christmas festival in the city, gives me a good/sombre feeling. Even if I have shares, I will not sell even if I was in a bad shape - next year willl probably be different

Portfolio down 6.8% this YTD. Celestial (my biggest holding) is now 36 cents, PE of 2.8. Longs 44%, shorts 5%. (A singapore share)

Celestial 2008Q3 performance

Key Highliights:
• Sales rose 28.1% to RMB581.7 million

Growth in sales volume of industrial products

Overall increase in selling prices
• Net profit up 54.6% to RMB162.1 million

Due to unrealised exchange gain of RMB63.2 million
• Maintains healthy financial position and cash flow

Net cash provided by operating activities of RMB205.1 million

Cash and cash equivalents of RMB1.4 billion
• Trial run for biodiesel facilities commenced in late October


Singapore, November 14, 2008 - Mainboard-listed Celestial NutriFoods Limited (天圜 营养集团有限公司) (“Celestial” or the “Group”), a leading soybean protein-based food & beverage products manufacturer in the PRC, today announced its results for the three months ended September 30, 2008 (“3QFY2008”).
The Group posted a 28.1% growth in total sales from RMB454.3 million in the three months ended September 30, 2007 (“3QFY2007”) to RMB581.7 million in the quarter under review. Net profit surged 54.6% to RMB162.1 million from RMB104.8 million in 3QFY2007.

In 3QFY2008, the Group maintained a healthy and satisfactory financial position and cash flow, with net cash provided by operating activities of RMB205.1 million and cash and cash equivalents of RMB1.4 billion as at end of this quarter.


Outlook and Future Plans
Due to overall concern on food hygiene, sluggish stock and property markets and the uncertain domestic economy in the PRC resulting from the global economic downturn, the Group believes that retail sentiment will continue to be depressed. In addition, managing the costs of raw materials will remain challenging for the Group despite the fairly stable raw materials market in the quarter under review.
“We will continue to observe market trends and raw material price trends closely, and take necessary actions to sustain our competitiveness and our leading position in the industry. We also hope that the economic stimulus measures announced by the PRC government will boost economic growth in the country, as well as improve consumer confidence, and in turn, induce
higher domestic consumption,” said Mr Ming.

My thots.........
It reported a credible performance of 25 RMB or profit of RMB 162 Mio.....notice the way they made the announcement. They have no intention of hiding that the quarter performance is boosted by foreign exchange rate on their convertible bond.... this is a testament of honest management. Other companies may not even highlight this.

It also reported that no dividend may be given in this Q3. I believe this is prudent, and also shows the candid and honest relation with shareholders . It could have waited for Q4 and just remove the dividend.

I believe all economies and companies will face great challenge ahead in 2009. However, I believe the strong management will manage to continue to deliver satisfactory performance, and will boost strong growth when the upturn comes. China is in one of the best economy to weather this global recession. It has one of the highest foreign reserves, and has the economic power to stimulate its economy with stimulas package on infrastructure and cutting interest rates.

Celestial price is now 36 cents with projected PE of 2.4 . I will continue to hold and add to my holdings at opportunistic down prices. It is now trading at depressed valuations and has the potential of being a multi-bagger with a market cap of 230 Mio (636 Mio shares outstanding). I will compare this vs Want Want which has a market cap of a few billions dollars, and has the potential to reach its height.

Portfolio now down 8% with 44% vested. I have been a good boy, closing my shorts position as I think Oct has been a torrid month. At the same time, I am also going for a short holiday in Gold Coast. This cost me 4-5 %, but bo pian.

I think it is rather risky to short now. However, last week Japan went to recession, Germany also showed a strong downturn. US data is also horrid.... Lets see, I am resisting temptation to short....

What I will do is to wait for a major change, a major bankruptcy and deploy 15 %.

Novemeber 1st Week Transaction

As October was a bad month, I was waiting for a re-entry. US elections was round the corner, and US market will rally with any moderate move.

On Tuesday, US market rally with anticipation of Obama winning. I entered at 996.75....yes lousy again. I also use this opportunity to close my Soyabean futures 972.( buy at 970 and went down as low as 933). I also sold SCI at 230.4

Why I entered Soyabeans ? China is a top importer of soyabeans, and last week commodity prices was rising. With the milk scare in China, it could possible create demand for soyabean products. However, I was wrong as usual, with deleveraging still going on. The BDI index was also plunging from 9000+ to 1000+ in a matter of 3 months. Better keep my commodity speculation to a minimum first. maybe wait for it to stabilise within a ban +-10% in 2/3 months before making my move.

I also closed my US futures on Friday. Wednesday+Thursday plunged by about 10% to 905. With good money, better zao. Dun be greedy. Friday may be a bounce even though the work employment numbers are coming out and GM + Ford reporting as well. STI bucked the trend and stayed flat ! Astonishingly.

Weekly Recap - Week ending 07-Nov-08
It was a tremendous week in our country's political and social history, even if it wasn't a tremendous week for the stock market.

On Tuesday the United States made history, electing its first African-American president in Barack Obama while holding true to the longstanding, democratic principle of a peaceful transition of power.

As remarkable as that proud fact is, it unfortunately doesn't change the fact that the U.S. economy is in a slump that is pressuring earnings prospects and stock prices. Accordingly, the stock market didn't spend any time basking in the monumental history that was made Tuesday, which also included the biggest Election Day rally ever in the stock market when the S&P 500 surged 4.1%.

It became evident in no time at all that the market's economic concerns weren't assuaged in the voting booth. Over the course of the two trading sessions on Wednesday and Thursday the S&P 500 dropped 10.0%.

The decline followed an 18% gain over the preceding six sessions, so it was understandable that there would be some retracement of those gains. However, the scope of the pullback made it clear that there was more behind the selling than simple profit taking.
The item that got the market's attention turned back so quickly to the ailing economy was Wednesday's ADP employment report, which estimated 157,000 jobs were lost in the private sector in October, the largest decline since November 2002.

This report followed some dismal auto sales reports for October on Monday and set a very nervous tone ahead of the government's employment report for October on Friday.
Several other economic reports compounded the selling pressure in the middle of the week. In particular, September factory orders declined 2.5%, the October ISM Services Index at 44.4 slipped below 50.0, which is viewed as the dividing line between expansion and contraction, Q3 productivity slowed to a 1.1% growth rate from 3.6%, and continued jobless claims of 3.843 million were at their highest level since 1983.

The disappointments weren't confined solely to economic news either. Another wave of cautious-sounding guidance from corporate America also factored heavily in the action.
Tech bellwether Cisco (CSCO) led the pack of disappointments with a warning that its fiscal second quarter revenues were expected to decline 5% to 10% as most enterprise customers across all industries it serves are facing a very challenging business environment.

Separately, influential banking analyst Meredith Whitney of Oppenheimer & Co. suggested in a CNBC interview Wednesday that she felt big banks were going to be in the position of having to complete more capital raises in coming months and that she felt many of their stocks still had a lot more downside risk in them. She feels that Citigroup (C), for one, could trade into the single digits.

On the heels of her bleak assessment, retailers on Thursday posted some lousy same-store sales results for October, with the exception of price leader Wal-Mart (WMT), which reported a 2.4% gain. Overall, same-store sales declined 0.9% (and 4.2% excluding Wal-Mart), according to the International Council of Shopping Centers.

In the midst of the reports from the retailers, it was learned that the European Central Bank cut its key borrowing rate 50 basis points to 3.25%, as expected, but that the Bank of England stunned everyone by cutting its key rate 150 basis points to 3.00%.

The move by the Bank of England was so aggressive that it was scary. Central banks simply don't cut rates in this fashion, unless they feel they are way behind the curve with the appropriate monetary policy as it relates to economic prospects.

The Bank of England for its part said there has been a marked deterioration in the outlook for economic activity at home and abroad and that it took the action it did to guard against inflation undershooting its 2.00% target.

It deserves pointing out that the annual rate of consumer price inflation in the U.K. was 5.2% in September or just ahead of the 4.9% growth rate in the U.S. where the fed funds rate is now 1.00%. From the market's vantage point then, the Bank of England, as well as the ECB, still hasn't cut rates enough to help forestall a protracted, global economic slowdown.

This brings us to Friday's employment report, which didn't contain any good economic news.
Nonfarm payrolls declined 240,000 (consensus -200,000) and the prior month was revised to show a decline of 284,000 positions versus an originally reported loss of 159,000. Job losses were seen in all areas in October, with the exception of modest gains in education and health services and government.

The unemployment rate rose from 6.1% to 6.5% (consensus 6.3%). Hourly earnings were in line with expectations, up 0.2%, as was the average workweek at 33.6 hours.
1.2 million jobs have been lost over the first 10 months of 2008, but tellingly, over half of those losses have occurred in just the past three months.

Ironically, in the wake of the worst economic news of the week, the stock market rallied on Friday, jumping 2.9% in a broad-based effort. The upside move was even more striking considering Disney (DIS) had disappointing earnings, Qualcomm (QCOM) provided fiscal first quarter revenue and earnings guidance well below current consensus estimates, and both Ford (F) and General Motors (GM) posted massive third quarter losses while showing they were burning through their cash.

Ford used $7.7 billion in cash in the quarter while GM used $6.9 billion. GM went on to say that, looking into the first two quarters of 2009, the company will fall short in capital unless economic conditions improve, it can gain access to capital markets, can sell assets, or can secure government funding.

That the market would rally on this battery of bad news indicated it had already accounted for it in the prior two sessions when it fell 10%.

It would be remiss not to add that President-Elect Obama gave his first press conference during afternoon trading Friday in which he summarized a discussion he had with his economic advisory team. He mentioned four initiatives he would pursue immediately upon entering office in January: (1) a rescue plan for the middle class that would include a new fiscal stimulus package, which will be his first priority (2) working to stem the spread of the impact of the crisis on other sectors of the economy (3) reviewing the current administration's implementation of the financial program and (4) laying out policies that grow the middle class and strengthen the economy for the long term.

When Obama acknowledged that he doesn't officially take over until January and will stand by to let the current administration see things through to the end of its term, the stock market gave back over half of the day's gains. However, the session ended on a positive note as a late rush of buying interest left the indices near their highs for the day, which were seen just before President-Elect Obama started his press conference.

So, while President-Elect Obama has made it clear that he wants to bring change for the country, it was clear that things remained the same for the stock market, which had another volatile week of trading.

The volatility is a by-product of the uncertainty about the timing of an economic recovery and a nettlesome belief that consensus earnings estimates for the fourth quarter and 2009 still haven't been lowered enough to reflect the economic deterioration.

In brief, there was a lot of emotion during this historic week, yet it was fundamentals -- or the perception at least that fundamentals are weakening -- that seemed to be driving the market.

--Patrick J. O'Hare, Briefing.com

**For interested readers, the S&P 400 Midcap Index, which isn't included in the table below, declined 5.1% for the week and is down 37.1% year-to-date.

Oct W4 Transactions

Portfolio YTD down 1% with the Celestial now up reaching 45.5 cents. PE now 3.4 still cheap cheap :). Celestial just released a report on 31 Oct that they will release results at 14 November. With this, I believe their results should not come too bad. (no profit warning). I hope for a pleasant surprise as some upside might be seen with a better results after the earthquake in Sichuan on 12 May. I suspect it will be around +-10%.

I closed my S&P shorts at 936.25, (from 945... yes I went in again...and yes I let a potential 100K off when it was down 10% to around 830...., the ASIAN market distracted me, I thought with ASIAN markets plunging, US market has to do the same, and I was waiting for the big captitulation which did not happen) the day after the big surge.

I was deliberating whether to close my shorts after previous day 10% surge (yucks). After a few hours, the US market was deliberating between negative and positive, so I believe the sellers who want to sell have already sold. With this, I close my shorts as it has been a terrible October for stocks, and VIX had been reaching precendedly high of 80+. DOW had not had a positive through day till the last 2 days of October. I was actually deliberating whether to close my shorts the day before as it had been going down about 5 days in a row. Last Friday, S&P ftures hit a down of 855, however it closed 2+ percent down. STI closed on Friday down 6-7%.

1 Lesson learnt here is in the global crisis, emerging market will be hit more even though the orginator is in the US.

In October, the Dow Jones industrial average fell 14.1 percent and the broader Standard & Poor's 500 index lost 16.9 percent as the panic over a now-easing freeze in credit markets shifted to fears of an acute recession.

Transactions

After a big crash last week of almost 15% (recovered on Friday -6% to -1.9%), US equites rebounded 13% on Monday night. STI on Monday went up to 6 % and another 7% on Tuesday. I sold 3 SIMISCI at 272.2 (Fr 255), SGX 30 contracts at 6.12, 4 S&P 1043 and 6 1053. Long 10 Nymex mini-oil at 82.9. I had expected a long overdue rally on Monday. So I went in to short on Tuesday STI. S&P futures was positive also. It went as high as 1059 as Paulson went live to talk on the bailout package.

My idea is a pairing where I long oil and short S&P, where if markets go up, oil long will cover my shorts. If markets drop, I expect markets to drop harder than oil.
Very wrong, oil dropped faster than S&P futures. I cut oil at 77.9 as it was speculative. At least my S&P drop could compensate my losses. Why I long oil
- oil with less supply than demand is still a bull market for oil

Why I cut oil and my conclusion.
- entry is important
- oil with reduced demand due to recession
- speculative positions will be cut
- trading firms are now getting their credit lines cut, therefore cutting their position further
- 55 dollars is a good entry point

I also close all my short positions on Friday.
SGX 5.61 (Thursday - very stuipid)
SIMSCI 241.2
S&P 946
Why I close my shorts, did not want to lose a winning position.(more emotional than any logical thinking)

My thoughts right now
(-) things will probably get worse
(-) credit card crisis will be next
(+) LIBOR credit swaps are getting slightly better
(+) FED will purchase 250 billion of shares in Financial institution
(+) Warren Buffett is buying
(+) VIX very very high (70+)
(+) Oil is dropping
(+) Bad news follows a drop before rallying. The situation could be changing to rallying on a bad news. Sentiments are really bad now which is a contarian indicator.

I am anticipating a mini short volatile movement up. Lets see when VIX drop to 50+ or S&P at 99+.

Portfolio down -16% now. with Celestial at 30.5 cents with PE is now 2.2 with expected earnings of 14 cents. Soyabean futures now trading at 905 dollars down 40% from high of 1500+ . It also declared on 13 Oct that its products is cleared of melamine.

My thoughts on S-shares.
Sentiments are quiet bad now on S-shares. My thoughts, it is only in extremely bad sentiments that stocks get battered so badly. China will be the next superpower, and good sentiments will be back, so no worries. We have already seen RMB appreciated 10% against S$ the last 1 year. A lot of people also condemn the S-shares here mentioning that HK shares are much better. Well, this is what I think - HK shares are mostly big blue chips and growth will be quite limited. S shares on the other hand have smaller capilization and growth for 5-10 baggers are there. But saying that, I agree alot of S shares here are very poor quality. No matter how attactive the PE (even 1) or PB (some even below cash value) of textile or capital intensive industries companies or cyclical companies, cashflow negative companies, I avoid them like a plaque.

My investment is still on solid companies with sustainable advantage, continuous growth, continous innovation, management who align themselves with shareholders.

My China Milk divestment was with the same principals. Even with record profits, it did not give a dividend and although it gave a dividend in Q1, it was a puny 0.5 cents. If they could justify with investment within that year, I could still give it a benefit of doubt. Thus, I sold out and reinvested back all in Celestial.

Besides Celestial, there are also a few worth investing, a cosmetic company, a shoe company, a company selling pork, and a bottle manufacturing company. All of these copmanies PE (around 3-4) is still higher than Celestial 2.2, thus I have no urgency to invest in them yet.

The week after the Black week

Weekly Recap - Week ending 17-Oct-08
Does it get any crazier than this past week? Let’s hope not, unless of course the end result remains the same.

In the week that just concluded the S&P 500 managed to record both its largest, single day point gain ever as well as its second largest, single day point loss ever. Meanwhile, the intraday swings throughout the week were epic.

The S&P moved in a 9.5% range in Thursday’s session alone. For some perspective, consider that the S&P gained 3.5% for all of 2007.

The volatility was a by-product of a host of factors that ranged from reports of forced liquidation by hedge funds to reports of strains easing in the credit market after massive liquidity injections by central banks.

To be sure, the week got off to an eye-popping start as the market soared 11.7% in a snapback rally from greatly oversold conditions.

Word that Morgan Stanley (MS) completed a deal to receive a $9 billion capital injection from Japanese bank Mitsubishi UFJ, central bank plans to provide as much dollar liquidity as needed for short-term funding markets, and news that several European countries were guaranteeing interbank lending provided the spark for Monday’s rally.

In addition, speculation that the U.S. Treasury would be making a direct capital injection of as much as $250 billion in U.S. banks, that it would guarantee bank debt, and that the FDIC would guarantee deposits in non-interest bearing deposit accounts also fueled the buying efforts.

The speculation turned to fact Tuesday when the Treasury formally announced like measures. In particular, it said it would invest $125 billion in the preferred stock of nine, major institutions – Goldman Sachs, Merrill Lynch, Bank of America, Wells Fargo, JPMorgan Chase, State Street, Bank of New York Mellon, Citigroup and Morgan Stanley – and direct another $125 billion toward other banks in a capital injecting initiative that mandated curbs on executive compensation for participating entities.

In the wake of Monday’s surge, however, the market stumbled Tuesday on some profit taking activity and lingering concerns about the economic outlook.

The economic concerns came home to roost on Wednesday in a battery of worrisome updates.
Specifically, it was reported that retail sales declined 1.2% in September, with declines seen across all discretionary spending categories. That news, combined with a downtrodden Beige Book report that revealed slowing activity in all 12 Fed districts, and a reminder from Fed Chairman Bernanke that the economic recovery won’t happen right away, even with a stabilization of the financial system, helped drive the market 9.0% lower, marking one of its worst percentage declines in history.

An escalation of selling interest late in Wednesday’s trade gave life to reports that there was forced selling by hedge funds.

That selling carried over into early trading Thursday. The S&P 500 fell another 4.6% and the volatility index (“VIX”), otherwise known as the fear gauge, spiked to an all-time high.
Then, in an instant, sentiment shifted and the market began a furious recovery effort that left it up 4.3% at the close.

That rally saw retailers and transportation stocks bounce back sharply with oil prices dropping below $70 per barrel at one juncture. The drop in oil prices followed a weak industrial production report and reflected underlying concerns about the prospect of a global recession.
OPEC is slated to meet Oct. 24 to discuss oil prices and it is expected that the cartel, having seen prices plummet more than 50% from the all-time high reached in July, will announce a production cut.

Friday’s session was another roller coaster ride.
The S&P 500 swung 7.2% between its low and high points of the day amid alternating feelings surrounding the weakest level of housing starts reported since January 1991, Warren Buffett’s acknowledgment that he is buying American stocks for his personal portfolio, and encouraging others to do the same, and a heavy load of expiring options on stock indexes, stocks and exchange traded funds.

In the midst of all that transpired, we’d be remiss if we didn’t mention that the third quarter earnings reporting season kicked in to full swing this week.

Financial and technology companies led the barrage of reporters that included the likes of Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), Merrill Lynch (MER), Johnson & Johnson (JNJ), PepsiCo (PEP), Intel (INTC), IBM (IBM), Google (GOOG) and eBay (EBAY) to name a few.

Third quarter results themselves were largely mixed, yet the key consideration for the market was that few, if any, companies really extolled their near-term prospects. Several companies bemoaned a lack of earnings visibility on account of the economic environment.

So, both the earnings results and economic data this week were fairly unimpressive, yet the market still managed a 4.6% gain.

Then again, with the market plunging 18.2% in the prior week, some bargain hunting activity was to be expected.

Signs of improvement in the credit market aided in the buying efforts.
The overnight Libor rate dropped to 1.67% from 5.09% last week; overnight commercial paper rates fell to 1.05% from 3.50% last week; and the TED spread, the difference between 3-month Libor and the 3-month T-bill, narrowed 100 basis points from last week to 3.63%.

However, the fact that 3-month Libor rates didn’t come down nearly as much as overnight rates (only ~40 basis points from last week’s peak) contributed to a sense of uncertainty about the pace of recovery in the credit market.

Until that uncertainty is removed, the stock market is expected to keep trading in a rudderless fashion as emotion, more so than fundamentals, will steer the action.

--Patrick J. O'Hare, Briefing.com
**For interested readers, the S&P 400 Midcap Index, which isn't included in the table below, gained 0.9% for the week and is down 35.3% year-to-date

Black Week (Monday- Friday)

This whole week was one of the worst week ever for US financial markets.
US market has been dropping 6 consecutive days, with the last 2 days dropping 7% on Thursday and Friday futures was actually -6% before recovering to -1.5%.

Having closed my S&P shorts at 975 (And I thought I was very greedy already from 1300), my portfolio is also suffering. It is down 23% now. (in fact down 15% last 2 days). My strategy did not do well even though I know a big bear market is coming. My strategy was to buy undervalue stocks but to sell futures. what went wrong ?
1) My shorts was not enough to cover my longs. My shorts was only 25-40%, while my longs was 50-80%
2) In a bear market, one should sell and hold, However, I traded in and out, missing some big movement.
3) My strategy ideally is to cover at a reasonable down point, and buy when it dip, however this time when I really decided to close my shorts, I left 2 big days of down movement (~10%)
4) Will have to review my strategy again.

One of the worst hit is my main investment Celestial now at 28 cents. It is now trading at a ridiculous PE of 2 and dividend yield of 7%. Anybody who buys this now definely make a ton in a few years time.

Recent news on Ferrochina's bankruptcy and China Printing and Dyeing's scandal has caused china S shares on a downward spiral with no respite. The baby is thrown out with the water basin, Is this justified ?
1) Celestial has a net cash of 300+ Mio RMB after deducting its CB and loans. (About 10 cents per share)
2) It has already spent the majority of its capital infrastructure (ex inventory I think) for its immediate expansion (15,000 ton beverages, 5000 ton powder,10,000 noodles, 5000 pasteries) lauching 2008 year end. Thus its cash position is alright
3) Being granted as a sole company in charge of the soya bean technology zone speaks volume of the trust and due dilligence done on Ming Dequan (the Chairman) and Celestial, not your Tom/Dick/Harry China textile company.
4) It has exciting plans for the company expansion, which I believe it will grow to be one of top brands in China and not in a downward spiral. Yes I think the tainted milk incident will pass in 6 months time (as in SARs ) and yes most importantly milk is not soya.
5) Why I persist in continuing buying (maybe I am stupid) is that the only companies for exponential growth you can buy is in China and not local Singapore companies (maybe 1 or 2 Raffles Education locally)

Lets see Celestial performance in the coming quarters. Soya Bean prices have been trending down almost 40% from its peak. It probably will affect industrial products like soya oil however I think it will be positive for its retail products.

I will hold my shares and see how it performs in 3-5 years time. It should give me a few baggers by then. It is a no brainer now to average down.

Capitulation ...Blood on the street

Wednesday.
STI is now down to 2035 (down 125+ points) on 9 October.
S&P has been down 5 consecutive days, and down about 15 % just last 5 days.
VIX has also reach a high of 50+.
European banks are now feeling the heat, with the Iceland nationalizing 2 banks. UK spending 1 trillion to prop up banks. UK is now down 5% to 4300. There was blood in the street, and reaching capitulation level.

I closed my S&P shorts at 978. I had wanted to hold it but the futures profit was too good.
I also closed my SGX shorts at 5.61. I expected a rally coming soon.
I closed my SIMSCI at 262. I actually put an order at 255, but the stupid DBSVickers call me and say cannot reach my price in the morning which was 263 (fr 268). This distracted me and emotions overcame me. I should have waited as after being down so long, and Dow went down another 4% yesterday, capitulation will reach in the afternoon. SIMSCI close at 252. Next time, think for 10 seconds and call him back.

Went into DBS 14.88 (fr 15.6+), Keppel 5.61 (fr 6.1)...it has actually been dropping 18 % last 3 days. (fr 7.2), Swiber (0.78) and Celestial (0.43).

Lesson learnt, go for big caps... for small caps have to catch extreme (10%) at least.

Portfolio End Sep08

Kept closely to my short term trades and sold off C &BC for a small profit. Also sold off my CM (0.4), a bit emotional on my part but I find that the next few months milk demand will go down. So even though it is an innocent party, it will still be affected. After I sold, it rebounded as it was at a depressed price...sigh.

Shorted S&P on 1208 on Tues ....wanted to cover on Friday as I thought the Bill is going to be passed, however I overslept...in the end covered at 1210.5. A small loss

On Monday...wanted to long SIMSCI as STI has been dropping from Tuesday to Friday last week. Long 10 SIMSCI at 299.3...it reached till 302.8 before dropping.... In the afternoon, I was deliberating whether to wait for the bailout news to be announced as SIMSCI was still dropping. I close it at a lost at 294.3. Furthermore Dow futures were dropping. My rationale is that in a bear market, longing is very dangerous especially it is speculative, so I cut off my loss.

On Monday, Fortis and some banks in UK were going belly up. Their CDS doubled within a week and had liquidity problems. Fortis had to be partly sold and nationalised. In the US some banks were also having issues. I shorted S&P in the US morning at 1176 (down 44 points) I was feeling rather naked in a bear market. What if I am wrong...I can still hold. If I don't short, my position will be quite bad. After I shorted, I realise I might be shorting at a low position, so I put a cover at 1169. After which, I made an order at 1176 again.

Somehow or rather, I could not sleep very well. My order was filled at around 3am. I went to turn on the TV at around 4-5+... wah I thought I saw wrongly...S&P at 1107.... Dow had drop 777 points as Congress did not pass the Bill.

In the morning, I tried to make a sell order for SIM SCI at 281.8 (fr 291), unfortunately futures only reach 281.7 ! So morning it went as low as 275+ before making a restounding recovery to 291 ! There was more fear in me, that is why I did not do too much. As most shares rose back, I bought Celestial at 0.53 (-0.05). I also closed my S&P short at 1129. (VIX over 40+ and big fall)

Most shares recovered , but not Celestial. I think it is not justified. Probably some big funds are still trying to unload.

Celestial is now trading at PE of 3.7. With the milk scandal going on, will it get affected ? My view is that sales might slow down, however, it will be buffeted by some people who switch from milk to soya bean. This will probably last 3-6 months (1-2 quarters), however I think this will be a good opportunity to grab an excellent company.

CN has shown over the years to increase revenue and profit. It posses strong branding which is one of the top 500 retail brands in China. It also posses top technology evident by the government decision to award it the Soyabean technology zone, as well as its additional industraial products it has diversified to. Is it shareholder friendly ? I believe its dividend policy is much better that other China companies. I will continue to hold and add to much position if it goes down further.

Well, Dow (4%)/S&P has rallied on Tuesday after the big slide on news the bill may be reinstated. Let see how things work out.

Fixmarket sep 08

I wanted to clean this up last year...but did not. This has been fustrating me time and time again...and I want to end this stupid nightmare.

Now Mr. Jiang has run away. His greatforce website became a porn website. His company and personal handphone has been disconnected.

With me as a local director, I cannot run away. I went the seek Emmy's advice..

THis is what she told me... there are 3 scenarios now
1) force the company to close (strike off), this involve legal fees and lawyers and a potential wopping 10K
2) wait for 7 years before closing. In the meantime , every year has to hold/sign AGM as well as publish audit reports for ACRA. Since it is dormant, we will request next year not to publish audit reports to ACRA. This should save some fees
3) execute the following plan
- 1) email Mr. Jiang a few times and get his no reply
- 2) send a registered mail to resign as a local director and request him to contact me
- 3) send another registered mail saying that he has not contact me and I reference my resignation date, and stating I have discharge my duties as a director
- 4) Tell him that I will close the company if he does not get it touch with me in 4 weeks
- 5) Issue him an ultimatum that I will close his company in another 4 weeks.
- 6) Go to ACRA and plead ...most probably have to wait another 1-2 months.....

I have done 1-2....in mid November I will do 3, start Dec - 4, End Dec -5, Jan -6 go find ACRA.

Why we are doing this is because we do not want him (if he is ever able to) to have a potential court case against me, which I am closing the company against his wish. Emmy is right, in whatever we do, we must make sure there is no possible hold against me.

For Emmy's case, she made Amy sign in the contract that the "jewellery" case has nothing against the Emmy's account company and her personnel. This is to absolve her of any liability. Previously, Amy tried to involve Emmy and the company stating that she hid her gold in the company and Emmy was involve in the gold hiding,

Really have to protect oneselve against some of these illogical people who might harm you.

Portfolio Sep 08

with the massive roller coaster....I manage to clear out my shorts....maybe left the last big chunk of meat but too bad. The big movement out also went in too little....should just have wacked ....VIX was around 36, and 2-3 major bad news + already down 3-4 months......

What to look out for next ....3-4 months down + VIX above 33 + 2-3 major events already rally but failed....and blood on the street..... last 5 day downs 8%....

Portfolio down 5 %.
Longs 57 % + 5 % just added, cash 43 %. No shorts.

Short Term Plan
i) clear my short term investments
ii) start shorting
iii) clear my longs

With what the FED has done, it has prolong the downturn....so I see another 2 more years (total 3) of downturn till 2010...... Strategy....cover shorts in 2010...boost equity in 2010 100%..... and leverage if neccessary....and next year buy commodities.

Capitulation & Massive recovery Sep 08

Recounting Capitulation & Massive recovery

2 weeks ago

Freddie/Fannie Mae required a bailout, massive rally followed follow by dropping again and drop further

1 week ago,

Lehman brothers had some issues, they had the weekend to find a buyer, failing which they have to file for chapter 11. At that point of time, I felt that with the Fed digesting FN/FM, they would not have appetite for this.

Monday,

STI started dropping early in the morning. I covered 7 S&P futures which was down around -30 points at 1212. I quickly shorted SIMSCI at 7 lots 304. (went down 4 + points )

Monday Night, Lehman file for Chapter 11, Dow crashes 4 % to 1190

On Tuesday 16 sep, I covered at 6 lots 296.4. Made an order the same day sell 4 lots at 301 and got it as STI recovered. As you can see, my shorts was getting smaller and smaller..... cannot be too greedy.

As I know with STI dropping already 20+% since June to Sep (4 months) the odds are great that a rebound was coming. I know I am getting overwhelm with fear. I would probably have capitulated if not for my shorts shoring up my longs.

On Wednesday, Dow was flat the previous day. So STI recovered. I also covered back 301.6 at a small loss.I wanted to change to the DOW as Dow futures were up 18 points around 1220. I wanted to change to Dow shorts, but I put an order at 1222. So, I did not get it unfortunately.

Wednesday night, AIG ran into trouble.....they have 1 day to sort out to refinance their capital. Fed was unwilling to bail out AIG, and was pushing the banks to help bail them out. S&P crash 4.5% to 1155. I watch in unbelive as my potential profit of 37K vanished !

So how.... I was overwhelm with fear and pek chek..... so now... I have to buy from blood on the streets. I put in several orders... Hong Guo 0.18 (0.22), Beauty China 0.445 (50.5), Hi-P 35 (38), Swiber 1.03 (1.14), Celestial 0.485 (0.55) DBS & SGX (did not want to put as the minimum bid that can be placed is 10 points which is little). In the end DBS 15.50 (16.14) ...I wanted about 80 cents shortfall and it has a daily buyback in place.... and SGX 5.55 (6.04) one of the most shorted stocks.... SIMSCI 282.2 (297)

Thursday...as expected STI crashed 100+ pints or 3.8% in the noon.... a few things happened......unfortunately a friend was distracting me asking me for investment advice...this made me not monitor the SIMSCI closely...also I had to settle FixMarket stupid issue again....

In the morning, I got 100lots BC which dropped 13%, in the afternoon I saw STI climbing already...so I quickly bought 100 lots celestial. In the end only about 5 % bought ( 90K).

In the afternoon, with Central banks intervention pumping in 100 billions of money into the financial market, most Asian countries made an astonishing rebound !

Thursday night , AIG got bailed out and massive 400 point for the DOW. After Britain's Financial Services Authority (FSA) imposed a four-month ban (January 16 next year) on short-selling financial stocks on Thursday the U.S. Securities and Exchange Commission followed suit on Friday with an immediate 10-day ban (799 Financial stocks till Oct 2)

Friday STI went up an astonishing 135 points (5.4%). DOW also went up another 300 points. What a roller coasting week !

What is next...I expect something postive to happen over the weekend or next few days probably Morgan Stanley.... massive shorts covering and novice investors pouring in should boost market up another 2-3 % at least.

STI 2559 (SIMSCI 317.15), DOW (11388) S&P (1255)... SIMSCI 324.4 will look nice, S&P (1280)

DBS High Notes investors at risk Bank warns they may lose entire stake in Lehman-linked product

SOME local investors of a product linked to bankrupt investment giant Lehman Brothers have received late-night phone calls from DBS Bank warning them that their entire stake may be wiped out. The investors have their cash in a product called DBS High Notes 5 that the bank offered wealthier clients last year. It came with a promised annual return of about 5 per cent.

But Lehman's collapse on Monday means the product will be unwound and investors may only get a portion of their investment back - or none at all.

One 52-year-old customer told The Straits Times: 'I received a call from my relationship manager late Tuesday night. He told me that...my investment may amount to zero.' The man had invested $50,000 - savings he had earmarked for retirement.

A customer in her late 40s said: 'My relationship manager called and told me to be prepared to receive a letter from the bank...[it] would say something to the effect that my investments in products like High Notes 5 may be totally gone.' She invested $50,000 and US$30,000 (S$43,000) in two separate transactions.

Investors are mostly clients of DBS's priority banking unit, DBS Treasures.

The product - DBS High Notes 5 - is a 5-1/2 year structured product linked to eight underlying shares, including Goldman Sachs, Morgan Stanley, Merrill Lynch, Macquarie Bank and Lehman.

Customers who invested in Notes 5 said they were sold on the relatively high 5 per cent annual payout by DBS. But now they just want their money back. 'What we do not understand is: How can the fall of one bank cause our funds to just vanish when there are seven other stocks within the product that are still trading?' said a man whose elderly aunt invested $50,000 in DBS High Notes 5.

According to a person familiar with the matter, the largest single investment made on High Notes 5 was $2 million, although this could not be verified by DBS.

DBS confirmed that it took immediate action to notify customers once it learned of Lehman's chapter 11 bankruptcy filing.

'As soon as the news broke we immediately started communicating...to our retail investor customer base,' the bank said in an e-mail reply to The Straits Times. 'We are very concerned and understand the anxieties our customers face as they wonder what will become of their hard-earned money.'

DBS said the Lehman collapse has triggered a 'credit event' and the bank called for a redemption of the notes on Monday. It said unwinding of the product has begun and it will be at least 30 business days before clients learn of the final payout. But DBS also confirmed that investors in High Notes 5 may - 'in the worst-case scenario' - not get back their entire principal amount invested.

The product's prospectus also indicated that in a credit event such as bankruptcy, the notes 'will be terminated and the investor will receive zero payout'.

The bank said the product does not contain a guarantee that the principal will be protected. It also told The Straits Times it would 'fully investigate' claims by some customers that High Notes 5 was in fact sold on such a promise.

Meanwhile, UOB and OCBC Bank said that though some customers have invested in Lehman-linked products, the volume was 'modest' and 'negligible'. 'Since news of Lehman filing for Chapter 11 broke, we have taken a proactive approach in updating clients on the latest developments,' said UOB's spokesman.

My comments, ever since I lost almost 50% in a unit trust (albeit small around 5K invested) I never trusted bank products.

Always remind ourselves this rule : Your banker is not your friend

Something I found funny

Stock Market Definitions

Bull market: a random market movement causing an investor to mistake himself for a financial genius.

Bear market: a six- to eight-month period when the kids get no allowance, the wife gets no jewellery and the husband gets no sex.

Momentum investing: the fine art of buying high and selling low.

Value investing: the art of buying low and selling lower.

Broker: poorer than you were last year.

Stock analyst: idiot who just downgraded your stock

Stock split: when your former wife and her lawyer split all your assets equally between themselves.

Market correction: the day after you buy stocks

Cash flow: the movement your money makes as it disappears down the toilet.

EBITDA : earnings before I tricked the dumb auditor

EBIT: earnings before irregularities and tampering

CEO: chief embezzlement officer

CFO: chief fraud officer

EPS: eventual prison sentence

Investment/Sentiment Sep 08

STI crashes from 2600-2450 around 5 %. due to Lehman brothers collapse.... Now AIG is next....I see panic selling and blood on the streets...butDow is still very high at 11000 down 15% from 13000 YTD.

I have caution myself for buying shares, but somehow or rather I was seduced into buying...maybe overconfident

In a extreme bear market, PE 6 to PE 3 is a 50% loss..... so even PE 6 may not give you a sufficient margin.

Right now, every upday is followed by 2-3 days of crashing, so every upday is an opportunity to sell. People thinking of cashing into the upside have fallen flat.

Now, many people are anticipating the market to come down even further. When it does, people will think that they are lucky to have avoided the market.

When there is a mini rally, people will think that it is a bear rally.“It will fall further.”And usually, it really does fall further.

Again, it makes people feel that they are right not to buy.It will go up and down until a point where even the most bullish person turns bearish.“......this will repeat a few times till people believe..."Oh its another bear rally"......that is when the finally the bull will turn up.

Even me right now, my shorts have not been covering the longs.... Lately, my shorts were 40% and Longs 55%. And what I learnt,
1) don't trade shorting in a bear market. In a Bear market, sell and hold.
2) Consider the US market vs the Singapore Market. Eg, Lehman did not secure fundings over the weekend. US futures very negative, but STI not that negative yet....can cover US and short Singapore futures. As when US market open, STI may drop further.
Eg 2, US rally the previous day, and futures up the next day. It is better to cover and short the US futures.

Dear Mr. Buffett:

First off, I would like to thank you for meeting with me and my Lehman Brothers team earlier this week. The opportunity to outline our plan to you personally was the highlight of my professional career. I know that it has been a few years since you had an office in Manhattan, and we aren’t asking you to take a chair and a desk, but your steady hand at Salomon Brothers is an example of what all of us on Wall Street are so desperately seeking in these difficult times.

As I clearly outlined during our meeting, I firmly believe that an investment in Lehman Brothers by Berkshire Hathaway is a classic opportunity for your great company to, once again, buy a fabulous global franchise at a very fair price. This isn’t at all like the situation that John Gutfreund put you in, and I recognize that you are wary given your previous experience. Wall Street has changed dramatically since 1991, it is far more of a franchise business that relies on capital than the “people” business that you were once used to. As you mentioned, the $700 million Salomon deal was the single largest commitment of your career at that point; and I take your point that such sums are now just the bonus pool for the commodity division

But much has changed. Over the past year, our firm’s market capitalization has shrunk by more than $30 billion (about 75%). All of the shareholder wealth that we’ve created over the past 10 years has been completely erased in a matter of months, and yet our firm has never had brighter opportunities nor a stronger safety net. This is the investment opportunity that we see for you and the rest of the Berkshire family. You have the opportunity to invest in the brokerage industry at prices not seen for a decade.

Our firm is poised to return to greatness, and many of Bear”s clients are coming our way.

Just the other day, a survey of U.S. institutional investors by Greenwich Associates found that “among the largest players, [Lehman and JP Morgan] scored highest in providing their [fixed income] clients the best support and understanding during the market turmoil.” This survey, conducted between February and April, also found that while JPMorgan was found to have slightly more institutional trading relationships, Lehman Brothers had slightly more market share.
What this survey will confirm for you is that our trading desk has continued to serve our many international clients, even when other brokerage firms were pulling back. This bodes well for the next Bull Market.
I have spoken to both the Treasury Secretary and Chairman Bernanke, and they are prepared to assure you personally that Lehman will continue to have access to the Fed’s discount window for many years to come, if so required. As such, our firm cannot fail in the traditional sense. The federal government’s balance sheet is impregnable. This is an investment circumstance that rarely presents itself in the lifetime of any investor; even one as successful as your own.
We are very reluctant to raise capital at this juncture. Our recent $6 billion equity raise was intended to help us weather even the worst storm. I understand that some intermediaries reached out to you at that time, and that you rightly advised that your modus operandi was not to invest in a club format. I regret that anyone troubled you with the idea back in May, and recognize that by passing then, as you said in our meeting, you avoided suffering the 44% drop in our shares since that deal was announced on June 10th.
Your wisdom is clear. But this time it will be different.

As we discussed, approximately $145 billion of long-term debt is outstanding including current year maturities of $18.5 billion with $8 billion of commercial paper. We have a plan to deal with these debt tranches, but recognize that a partnership with you would be a tremendous asset when we return to the debt markets. My Treasury team advises that we could save in excess of 200 basis points on our medium term paper if Berkshire agreed to be our strategc investor prior to commencing our current year debt refinancing activities.

The investors who joined our shareholder group in June recognize that much of what has happened over the past 5 weeks was unforseen. But no one likes losses, paper or otherwise. That being said, they will be elated if you join their ranks, let me assure you of that. That old saying, “dilution is your friend”, rings all the more true when the name “Buffett” is involved in the dilution.

My partners and I are prepared to consider a $5 billion convertible preferred investment, paying an 8% annual cash yield, with redemption and retraction rights in, say, 20 years. Our stock rallied yesterday on the back of the positive news out of Wells Fargo. But, with a sensible discount to yesterday’s closing price of $16.65, your firm would own approximately 33% of our Company, at closing. Naturally, we would very much want you to consider joining our Board of Directors at the earliest opportunity. Other names would be welcome as well.

As we both know, an announcement that Berkshire had agreed to invest capital in our firm would propel both LEH shares and the broader bank index. If yesterday’s rally is any indication, you could earn a 25% return in a single day merely on the news of your financial commitment to me and our franchise.

I appreciate that you have been displeased with the role that you believe Wall Street has directly played in the credit crisis of the past 12 months. I noted that, during our meeting, you specifically named Lehman and Bear Stearns as two of the financial institutions that were at the forefront of the growth in the CDO, CLO, ABS, subprime and credit swap markets.

As you know, the job of an investment bank is to bring to market the products that the market wants to buy. Although we pride ourselves in our Top 5 ranking in the M&A tables, the fees generated on advisory assignments pale in comparison to the revenue that flows from the underwriting side of our industry, whether it be equity, structured products or debt. I took your point that Wall Street must play a “quality control” role in the process of selling products to our clients, and I strongly believe that we did our utmost on that front.

We were so convinced that these vehicles were money machines that we bought them for the accounts of our own captive hedge funds. We put our money where our mouths were.
I understand that you are also dubious about the long term capability of the hedge fund industry to produce returns that exceed your sense of market norms. I have two points to make on that front.

Hedge Funds are a key revenue driver on our trading desks, and excellent Prime Brokerage clients as well. Up to 40% of our daily block trades are done for hedge fund clients. Moreover, our ability to create our own hedge funds has generated substantial fees from institutional investors and pension funds around the world. Although the recent SEC push to curtail some of the more attractive trading strategies of hedge funds such as ours may hamper our ability to beat the index, the fee streams that our funds generate are extremely valuable. Particularly at times, such as now, when the underwriting and advisory revenues are weaker than we would like.

However, if you would like a commitment from me to exit the hedge fund business, I will certainly recommend such action to the Board should you agree to our investment proposal. Although I am the leader at Lehman, I am always open to well-reasoned perspectives.
In summary, let me again thank you for agreeing to meet with us. I believe that you’ve been presented with a unique investment opportunity, and one that is sure to be successful. Your hallmark is to invest in top notch management teams, and I humbly submit that we’ve demonstrated that we can navigate difficult waters.

With your financial commitment to our firm, the sailing will be smooth, and the entire U.S. financial services industry will benefit from the rising tide that would surely follow a commitment from Berkshire. The positive impact that would have on the economy is clear, which would directly beenfit the rest of the Berkshire Hathaway portfolio of companies. This is the way that America can exit the recession that you believe we are experiencing right now.

Thank you, in advance, for your time and consideration. As Senator McCain said himself, and I passed along to you, “the country needs you”, and we are honoured that you are considering this opportunity.

Yours Sincerely,
“signed”
Richard Fuld,Chairman and CEOLehman Brothers Inc.

My take - act of desparation.....with FED swallowing FN & FM have enough indigestion on their hand..... its bye bye to them

Investments update

Haven't been updating so far as I have been extremely busy with work.

So what's new....as writing now, DOW is 11,640 up 100 points after reporting houses plunge by 7.6 % and foreclosure surge 55 %.... this is also 2 days after the FED's decision to close naked shorting period is over. DOW was actually down 10800+ 3/4 weeks ago with various news that a banks Freddic/Fannie/ Merill Lynch are going kaput
....so a suckers rally so far up 800 points....

My portfolio is up about 2 % ( it was up 13% highest in end May when Celestial hit 93-94 cents)...
Most of my profits is coming from my shorts
Trades so far
- 6 lots City Development from 11.6 - 10.5..... within 1 month
- 7 SIM SCI from 390 to 370.....left it to early.... mistake....should hold till blood in the street...no blood yet what for cover ?
- 10 contracts 356 to 353..... SIM SCI rebounded for 2 days from a low of 346 and I went it ....also mistake... after going down for so long and FED made the move, should wait for 1 week+ at least as it went to a high of 363...... here emotions have been affecting me as it has been sliding 3-4 weeks...
- shorted 20 lots Captialand 5.73 to 4.98 and covered.... Capitaland has more meat than City Development....CD is more astute having cleared most of their properties and less agreesive at the top.... their land bank is relatively cheap as seen in Lividia in Pasir Ris which was got really cheap in 1999 I think 200-300 psf only.
- 10 contracts from 357 to 347...... 1 mistake is that I should cover probably in the early morning if I expect a National Day/Olympic rally on Friday... here DOW was closing down 3 days and the it went down 200 points the day before..... If SIM SCI contracts is down a good portion in the early morning (at 8:45 it was trading around 343 down from 347), I should just cover
- now SIM SCI is 344 and STI has not been participating in the latest rally, so more meat is in the US market.... my current shorting is 7 S&P mini at 1300.45
- went it for a speculative play buying SGX from 7.45, cut loss at 7.05.... was expecting oil to drop....but oil did not drop till 1-2 weeks later, and the US market more important news were the bankruptcy of the banks. I was actually deliberating between SIA and SGX. I expected SGX to be more shorted, thereby more short fuel rally....this is being greedy....next time, take the safer and more direct theme related bet.... I would have earned at least 10 K and not lost 10 K if I were to employ this....knock my head..better learn

Stock portfolio wise
Celestial 51 % price now 72 cents
China Milk 13 % price now 69 cents
SMRT 3% price now 1.84 (my 2nd best gainer from 1.71....regretting did not add up)
Pokka 3 % price no 65 cents ( up 70% still in the process of a General Take over by its parent)
Maqurie Infrastructure 1%
Darco 0.6 %
S&P 7 contracts short 1300.25

Celestial reported 2nd quarter earnining...will update some of the business development.... I think it is doing rather well considering its revenue was affected by the Chengdu earthquake which affected its most profitable drink business... its profit is up 11% YoY.
I think it is an excellent business with PE around 5.8 FY 0708 and 4.7 FY 0809, which can grow sustainably with stable growth 10-20% next few years. Sentiment is quite bad now, but I am confident Mr. Market will rerate this excellent business with excellent business management.
I think I can get a 2-4 bagger in 2-4 years time. Lets see.

Neck pain

Haven't been feeling too good lately..... after sleeping on my kid's stuff toy, my neck which was unsupported became rather painful.
After that I went for a Kenko massage, and cutting my hair in Malaysia, I also had a short massage. This time, the pain got worse.....
I also continued to carry my baby kid, and the camel back broke when I carried my kid quite a far distance from the carpark to a restaurant in Alawad/Arab Street.

I went to my clinic downstairs ( on a saturday morning) and the Dr. prescribed some medicine. During the medication, the pain was numbed.... when the medicine effect wore off, the pain came back.

(This was 4 days later Thursday evening) I then visited Eu Yan Sang clinic for a Chinese therapy hoping it will help... this made matters worse.... I underwent acupunture around the lower back and head...and under some electric stimulating under some warm lamp...this did not help....the Physician then tried to turn my head a few times....this really made my head worse.....
Nevermind....She gave me some medicine to take...(in powder form)....since I tried it ( and it cost S$90+ including the acupunture)..... lets see the whether there is any help

4-5 days later by Monday, the pain was quite bad... (from a sitting/lying position to a standing/siting position, there is acute pain at the right neck all the way to my head)... I went to my corporate clinic for a referral. The doctor seems quite sceptical (maybe it is the same with all corporate doctors)... and gave me some medicine..... as what happened previously once the medicine was taken, the pain was numbed...once the medicine wore off, the pain came back.....that was around Thursday.
I wanted to see the doctor again on Friday, but the stupid policy means no doctor in the afternoon......

I went back the following Monday, and the refer me to the orthopedic for referral... and they gave me a date 1 week later on Tuesday.
This time, I think I will visit the private doctor which my Mother-in-law is visiting this Saturday...
Suffering for 4 weeks is no joke....I just want to get well soon...have been missing a lot of fun with my boy lately, and my poor wife has to take care of him and carry the heavy stuff....

My lesson now is once you have a slight neck pain,
- never go for a massage
- never carry heavy things more than 2 kg... no laptop...no carrying of kid
- never walk more than 100 metres if possible
(today I was actually feeling better in the morning, but the afternoon there was a stupid all hands meeting which I had to walk all the way to 168, and sit in a very uncomfortable position for 1 and a half hours repeating what has already been known)

US property - Update from US colleague

A friend of mine who is a LT delegate to US is in town for some training.

I had a short discussion with her and this are the takeaways
Property related
- She is staying near San Jose
- US home property has been dropping - very obvious
- US rent market is creeping up - from US $ 1100 to 1240 for a 1 bedroom - abit surprise, accd to her, because ppl cannot afford housing or foreclosed will rent instead
- People tend to move nearer the city now due to oil prices
- US property still quite ex. eg US 400 K for a 2 bedroom
- I am referring to property in/near San Jose. For central the property are dirt cheap.... US 400 K can buy a bungalow
- Banks are restricting funds and more prudent, eg. for Jumbo loans (above 500K) interest rates are higher

Polictics related
- Obama if elected will have more trade restrictions
- according to my colleague, they are likely to have stricter rules with regards to FTA. For eg. they will only look at FTA if the other party have the same policies (like free labour laws etc)

My take
Looks like the turmoil will take at least another year to drop as houses are still expensive~ maybe drop at least 10% and due to inventories . Recovery will be fast as supported by higher rents. But definetly, will have to look at economical activities to pick up. Mood in US is still rather sombre with little jobs ard.

Banks see plunge in home prices in next two years

ST 21 May, 2008

Banks see plunge in home prices in next two years

New homes, rising vacancy rates, unsold condos and fewer rental deals cited as reasons

By Fiona Chan, Property Reporter

THE slowdown in the Singapore housing market has prompted two banks to predict a dramatic plunge in home values in the next two years. In two starkly bearish reports, Barclays Capital and Credit Suisse have forecast drops of up to 40 per cent in home rents and prices, as demand and supply dynamics move in favour of buyers.

The reports, issued in the last two weeks, pointed to the malign cocktail of a flood of new homes coming on the market, climbing vacancy rates, a rising number of unsold condominiums and fewer rental transactions. They also raised concerns about the possible dumping of units by speculators. Barclays said that should this happen, private home prices could slide 28 per cent to 30 per cent by 2010.

Credit Suisse predicted a possible 40 per cent drop in rents and prices. Its analysis showed that sub-sale prices recently started to dip at several developments. Both banks also noted that developers were now more generous with price cuts, stamp duty rebates and agent commissions in an effort to move units.

They warned that smaller developers were likely to 'break' first. 'Just six months ago, City Developments and a few others gave zero commissions to agents,' Credit Suisse said. By March, most were giving 1 per cent to 5 per cent, an increase of three to 10 times in just six months. 'When Singaporean developers start to reach out to agents with higher commissions, you know they are feeling the pain,' it said. The pain is coming from slower growth in home rents and prices, as the effects of the United States sub-prime mortgage crisis takes its toll on market sentiment in Singapore.

Private home prices rose a smaller-than-forecast 3.7 per cent in the first quarter. Even then, Barclays analysts said this could have been boosted by a handful of high-priced transactions and 'may not reflect the depth of pessimism in the market'. Sales and launches of new homes also fell sharply last month, extending the slump.

Mr Colin Tan, the head of research and consultancy at Chesterton International, agreed with the Barclays report about a correction in prices. As more new homes are completed over the next few years, he said, rents will feel the pressure and prices will start to fall.

Not all property analysts, however, have such a gloomy take on the housing sector. Kim Eng analyst Wilson Liew believes the oversupply situation may be overstated. While there are 32,000 units being built and 42,000 more in the pipeline, current market sentiment could help slow the rate at which the planned units come onstream. 'It is likely that most of these units would be deferred indefinitely until sentiment returns or when construction resources ease,' he said. Developers could also keep lands in their landbank rather than develop them if there is no demand, suggested Macquarie Securities' head of Asean research, Mr Soong Tuck Yin.

Both he and Mr Liew believe the upcoming integrated resorts will give Singapore a boost and, while there may be a temporary weakness, home prices are unlikely to collapse. Mr Soong also said developers had stronger balance sheets now than in previous market troughs, and the current low interest rates and high inflation could lead people to buy properties as a hedge against inflation.

The Credit Suisse report, however, said negative real interest rates - often touted as a driver for property purchases - had not historically helped home sales. It also said that even with construction delays, actual completions had usually come in higher than forecast.

Steven Molnar Real Estate Mastery Course

Steven Molnar Real Estate Mastery Course

Two days ago, I was at Singapore Expo for Steven Molnar’s Real Estate Mastery Course. The event was scheduled to run from 9am to 9am. Real estate investing is something that I’m inexperienced in, so I had hoped to learn something useful from the course.

The morning part of the course was a bit slow starting. We were taught by Steven about wealth and he also scratched the surface on some financial planning.

Then he gave an overview of different investment options, using “7 commandments” to highlight why property investment is a good option. It wasn’t quite what I came for and at times, I was close to dozing off.

Steven next shared a ten year plan whereby we could make an income of $180k from property every year. The plan works like this:

- Buy a 300k property with a 100% interest only loan.
- Pay the interest with your rental income.
- In 10 years, the price of the property would have doubled.
- Refinance at 80% to extract $480k from property.
- Pay off the loan of $300k and you would be left with $180k in cash.

If you can repeat this every year for 10 years, you would have cash coming in every year.
The refinancing option allows one to extract cash from the property without having to sell it. This would be good for avoiding the payment of capital tax gains. In Singapore where there is no capital gain tax, we could possibly just sell the property and pocket the entire $300k instead of refinancing it.

In my view, the success of this plan would depend on a few factors:

- Rentals must be able to cover your interest. Periods of vacancy might be risky if you cannot service the loans.
- The property must double in price. This might or might not happen. If you buy at a high point, you might be stuck with very little capital appreciate even after 10 years.
- Banks must be able to lend you as many as ten loans.
- Getting a 100% loan.

The 10-year plan would probably be too risky for most investors, but trying to do it for one or two properties might be viable.
How is it possible to buy property with no money down? We can’t obtain a 100% loan in Singapore but Steven suggests a few methods:

- Making use of credit lines for the other 10% that needs to be funded by cash.
- Making use of vendor finance. This is something that is new to me.
- Borrow or go into joint ventures.

A few other tips I picked up from Steven include:
- Always do your own independent valuation.
- Amateur investors look at price.
Useful list of real estate websites (mostly for Australia):
www.realestate.com.au
www.residex.com.au
www.domain.com.au
www.hia.com.au
www.abs.gov.au
www.reia.com.au
The last part of the seminar was on some of the risks of real estate investing.
- Vacancy
- Property damage and bad tenants
- Loss of income
- Rising interest rates
- Market collapse
Steven also promoted his 5-day Advanced Real Estate Mastery Course and an upcoming property development project to us. Are they good?
If you recall my earlier post on Steven Molnar, there seemed to be a couple of websites with negative feedback on Steven. Most of it was directed to his association with Henry Kaye.
However, if you look carefully at the posts in this forum, most of the negative posts were made by people who were new users to the forum. It seems that their sole purpose in registering seems only to discredit Steven Molnar. I can’t confirm this though.
Other than one other site, I couldn’t really find much feedback on Steven Molnar or his Advanced Real Estate Mastery Course. That site gave a good review for the course but a negative feedback on Empowernet. You might find them interesting:
Review on Free Real Estate Course
Review on 5-day Advanced Real Estate Mastery Course
Empowernet shine wears off
Some news from Empowernet
Undesirable customer service

With regards to the Ecoville project that Steven was promoting, I can’t really comment much on it without more research. If you are considering to invest in it, do check the valuation of the land (among other things) to make sure you are not overpaying for it. Remember what Steven taught us - do your own independent valuation.

Personally, I don’t like the idea of depositing $1k just for the chance to find out more about it.
I would like to end this post with a small bit of advice.
Attending a real estate course does not automatically make you an expert at real estate investing. Nor does it guarantee you wealth. It forms just one part of your preparation. The knowledge you acquire has to be put into practice and continously worked on for your saw to be sharp. This is no shortcut in investing. Great investors always do their homework.
Good luck.

May review part 2 / Living with the Enemy

It is around 2 months since the rebound of the low in march.

Mistake 1
- went in puts too early. Oil has been inching up last 4-5 days. (coincidentally DOW also went up).
I was expecting oil to drop bringing in another rally from DOW. Unfortunately Oil went up again and Dow went down. I went to short it, thus shorting not at a high. Should have waited as Oil is up another day 6 days, chances are oil will go down, brining another up day.
....emotions running high
Mistake 2
- tikam to sell off celestial at 80.5 cents (75.5 previous day). Another mistake I repeated 2 years ago. Should never have sold off my best investment. PE around 5 and business up 40-50% this year. Worse still, that day I was in meeting whole day and the proxy hang up during that time. before placing an order, check how busy u r the next day.
Mistake 3
- bought back Celestial at a high of 88 cents. emotions again.... but should be okay long run.
Mistake 4
- I should have realise Celestial will be my big winner. I should have switch other stocks to this. too slow to recognise this.

What I did right.
Bought big (all available cash) when I realise Celestial made a superb business performance. At that time nearly 40% cash (10 % FD).
Entered in when fear was greatest. Did not let go of most shares/or started shorting until 2 months.

Strategy Next
- living with the enemy. I have not still an open position on SIM SCI and City Developments. Lets see how this plays out.

May 08 Portfolio

Portfolio at May 08

1. China Milk 0.77 1240000 49%
2. Celestial 0.75 800000 31%
3. SMRT 1.81 32000 3%
4. Pokka 0.49 85000 2.15%
5. Macqurie Infrast 0.875 36883 1.67 %
6. Darco 0.215 55000 0.61 %

7. Short 6 lots of CDL at 11.64
8. Short 7 lots SIM SCI at 391.3
200K FD

Almost 99% vested.

China Milk at PE 7 and a good play on agricultural theme. Going forward it can grow double digits in next few years.
Celestial Q1 4 cents. It was a very good quarter as I was expecting flat earnings due to Soya bean commodity price being sky high last quarter. Its ability to navigate such a tough environment shows pricing strength/power and I expect to grow further.

April 23, 2008, The Straits Times
Deferred payment scheme: Up to 4,200 homes may be dumped No URA figure on units sold but experts say 30% could be offloaded
By Jessica Cheam

THE hugely popular deferred payment scheme (DPS) - scrapped last year - may now be a thing of the past, but what sort of shadow will it cast on the Singapore property market going forward? This has been the question on market watchers' lips since the Urban Redevelopment Authority (URA) revealed last week that as many as 29,250 homes offered under the DPS, including 5,760 unsold units as at the end of last month, will be completed from this year to 2013.

The concern is that speculators who bought homes under the DPS could dump their units at below-market prices, and this could drastically drag down overall sentiment. But just how many units are at risk of being sold, and how big will the impact be?

The URA said while it has the number of units approved under DPS, it does not have data on how many units were actually sold under the scheme. But four property experts The Straits Times spoke to estimated that up to 30 per cent of homes sold under the scheme last year could be held by speculators who may offload homes as the completion date nears. This translates to roughly 4,200 homes, going by a back-of-the-envelope calculation.

That is because out of the 23,490 units approved under the DPS and sold, only about 50 to 60 per cent - or roughly 14,000 - are likely to have been sold under the DPS, say property consultants and agency bosses from Knight Frank, Savills Singapore, HSR Property Group and PropNex. The remaining 40 to 50 per cent were not bought under the DPS. Either developers did not eventually offer it, or buyers chose to pay via progressive payments, because buying a home with DPS usually means a further 2 to 3 per cent added to the price.

Next, property experts estimated that of the 14,000 or so homes sold under the DPS, about 20 to 30 per cent were probably sold to short-term investors or speculators. This means that as a group, speculators could be holding on to as many as 4,200 units.

Why are speculators prone to selling their units as they near completion? The DPS allowed buyers to pay just 10 or 20 per cent of the sale price upon purchase, with the rest due only when the unit received its temporary occupation permit (TOP) on completion.

Speculators would, therefore, typically opt for the DPS and hope to sell their units for a profit before the TOP. Any later and they would have to pay up for their homes by arranging for bank loans or other means of financing.

Industry experts were, however, divided on the impact these 4,200 homes would have on the market. Some maintained that panic selling is not likely, given Singapore's strong economic outlook, which is backed by upcoming mega projects such as the integrated resorts and the 2010 Youth Olympics.

Mr Eric Cheng, HSR's executive director, noted that homes set to be completed this year and next are less likely to be sold indiscriminately, since their owners are probably sitting on healthy gains. But those who bought at the peak of last year's buying frenzy, from April till October, are most likely to be at risk. These homes are likely to be completed after 2010.

Mr Ku Swee Yong, Savills' director of business development and marketing, said the sell-off will likely be staggered, because investors have different levels of holding power. Also, investors have bigger coffers compared to the last property peak in 1996, he added.

But he warned that if too many units in a single large project get dumped at below-market prices, overall market sentiment may be hit. Mr Colin Tan, Chesterton International's head (research and consultancy), thinks that the potential risk created by the DPS is relatively high.

He added that data on homes sold under the DPS should be collected and made public, so investors know 'what they're getting themselves into'. Yhe DPS was scrapped abruptly last October after a decade-long run to remove excessive speculation and ensure financial prudence in the property market.

'Don't indiscriminately buy S'pore property stocks' - Insider Apri08

Our article highlighting the BCA Research report has drawn a counter-view from a reader, who is a property industry insider. Interestingly, it is his personal take and it differs from his company's.

1. Even at current low interest rates, property buyers are not tripping over themselvesto buy physical properties in Singapore - look at the low, low URA transaction volumes.

2. Physical property prices on average have gone up 100% (e.g. East Coast - Fort Road 99-year leasehold condo price has shot up from $850 psf in 2005 to $1,600 psf in 2007) but our salaries have not doubled. So BCA's chart 3 (see below) on affordability index is very questionable.

3. The 100% surge in property prices is a result of high rental rates that force expats to BUY rather than to RENT. Genuine buyers are being forced to buy homes at 2x the price because there have been speculation, en-bloc sales and the presence of private equity funds with the financial muscle to hold on to assets for the long-term.

4. Higher-end property assets have seen prices fall but mass market is up in simple terms, as follows:
a. High-end $5,000 psf in mid-2007 to $3,000 psf in mid-2008.
b. Mid-end $2,500 psf in mid-2007 to $1,600 psf in mid-2008
.c. Mass market $800 psf in mid-2007 to $850 psf in mid-2008.

5. The reality is:
a. Property prices have surged in a short span of 2 years (2005 to 2007) because of liquidity & not affordability.
b. We are seeing prices correcting to a decent level (But what's decent, we don't know)
c. The sub-prime woes in the US are a mirror reflection of Singapore property in allowing free liquidity to result in price upside, so please be circumspect.

6. Let' not get smitten by the monthly change in property data. We have to be realists in this market:
a. Interest rates are likely to go up, not down, to combat inflation.
b. Singapore is globally exposed; any stumble in the US economy, we’ll feel the heat.
c. What we don't know: Buyers who bought property at, say, $1,600 psf could be trying to sell at $1,300 psf but there are no takers.
d. Supply, supply, supply in 2009: We expect rents to come down and property prices to weaken (by how much, we don't know)
e. Property stocks are not exactly cheap compared to Apr 06 levels. We think the high Apr 07 prices are anomalies and the result of greed. Apr 08 prices are fair.

8. We are not bears, just being realistic. We do like property stocks with regional exposure (Capitaland, KepLand) and mass-market exposure (Allgreen). So be very selective and avoid the high-end property stocks because there will be more bad news than good coming out from the US sub-prime saga.

Milk Nurtures Success

Hot Growth in Asia November 20, 2007, 7:59AM

Milk Nurtures Success

Capitalizing on China's growing taste for milk, the dairy company bought 970 head of cattle—before the ban on imports of U.S. and Canadian beefby Chi-Chu Tschang The outbreak of mad cow disease in Canada and the U.S. in 2003 knocked the North American cattle industry on its back. The largest importers of U.S. and Canadian beef, including Japan, South Korea, and China, banned the import of beef from North America. But for China Milk Products, the restrictions proved to be a blessing in disguise. The privately owned raw milk company had already purchased 970 Canadian Holstein cattle. Its state-owned rivals failed to import as many cattle because they had to navigate government bureaucracy to get bank loans.

Today, China Milk owns the largest herd of Holstein cattle in China and ranks 50th in BusinessWeek's annual Hot Growth rankings of Asia companies. Liu Shuqing and five partners started China Milk in the summer of 2001 to produce raw milk, after recognizing China's demand for milk was outstripping supply. As Chinese families become wealthier from the booming economy, more parents are buying milk for their children. China traditionally has not been a milk-consuming country, so local cows were not bred to maximize their milk production until very recently. Chinese dairy cows produce roughly four metric tons of milk per year, about half the yield from U.S. and Canadian Holstein cows. Monopoly on Bulls.

To narrow the gap in production, China Milk began importing Holstein bulls and cows, first from Canada and then, after the import ban, from Australia to breed with Chinese cows. At the same time, the Heilongjiang Province-based company also set up embryo-transfer and semen-extraction facilities to breed cows producing greater yields of milk. Once China banned North American cattle, China Milk cornered the market on bull semen and cow embryos from Canadian Holstein cows in China. "We used to love the import ban because no one [could] compete with us when we started in the industry," says Martin Choi, chief financial officer for China Milk. "But right now, we really want the import ban to go because it's stopping us [from importing] the cows." Any rancher wanting to breed his cows with a Canadian Holstein has to go to China Milk. The company charges its customers $9.50 per sample of bull semen from a Canadian Holstein, compared with $6.75 from Australian Holsteins and $2.70 from Chinese Holsteins. However, Chinese ranchers are still willing to pay a premium for Canadian Holsteins, especially after receiving a little help from the government. Starting this year, the Chinese government is giving Chinese ranchers a subsidy of $2 toward each sample of bull semen. The sale of bull semen accounted for more than three-quarters of China Milk's sales this year. The company's revenues have gone up more than fourteenfold, to $57 million, while profits have risen more than elevenfold, to $51 million this year, since 2003.

Persuading China to Lift the BanChina Milk's virtual monopoly on North American Holsteins won't last forever. American and Canadian trade negotiators have been trying to persuade their Chinese counterparts for years to lift the import ban. The restrictions were originally supposed to be lifted in 2007, but several more cases of mad cow disease were found in Canada and the U.S. this spring. China Milk Chief Executive—and son of the company founder and executive chairman—Liu Hailong now expects the ban to be lifted in late 2008 or early 2009 at the earliest. "Once they lift the ban, we will probably import the first batch of the best bulls and cows from the U.S. and Canada to China. Our other competitors will still be far behind us and won't pose a threat," he says

.....it has the biggest Canadian Holsteins in China... almost monopolistic nature
....another strength is in terms of financial strength which will pull it ahead of other competitors even when the ban is lifted
........ as of March 2008 there is still mad cow disease uncovered in Canada...http://www.medicalnewstoday.co.../50402.php
....with quaratine of a few months....this makes the advantage even more pronounce