This is a part of a post in the newspaper about capitalism and materialism from the perspective of a upper-middle class. This provoked some inner thoughts in me.....
"But if one is blinded by materialism, there would be no end to wanting and hankering. After the Ferrari, what next? An Aston Martin? After the Hermes Birkin handbag, what can one upgrade to?
Neither an Aston Martin nor an Hermes Birkin can make us truly happy or contented. They are like dust, a fog obscuring the true meaning of life, and can be blown away in the twinkling of an eye.
When the end approaches and we look back on our lives, will we regret the latest mobile phone or luxury car that we did not acquire? Or would we prefer to die at peace with ourselves, knowing that we have lived lives filled with love, friendship and goodwill, that we have helped some of our fellow voyagers along the way and that we have tried our best to leave this world a slightly better place than how we found it? "
In our pursuits of material weath, we should not forget the true meaning of life, what is important to us. To me, my family (my wife, son, parents and sibilings) is very important to me and I should spend quality time with them and help them in whatever I can.
Last year was a bad time for me where I injured my neck. This year, I will make conscientious effort to take care of my health, eating more healthly, having adequate sleep, doing more housework to make my house clean and conducive for me and my family.
Tuesday, January 6, 2009
Thursday, January 1, 2009
FY2008 Summary & Review
FY2008 is characterized as a tumultuous year, nothing short of explosive incidents. The Housing bubble in the US and the financial greed in Wall Street caused great mayhem in the Financial Institutions all round the world, with many of them going under. Great names like Bear Sterns, Lehman Brothers and Merill Lynch became nothing but a footnote in history as they went under or forced to seek refuge. Even countries like Iceland (had to be bailed out with loans of 2.1 Bill from IMF and 2.5 from othe Nordic countries) and Turkey need IMF infusion.
Many billions and trillions were lost in this year as we see many stock market crashed in one of the worst financial crisis and looming economic crisis.
DJI 13044 8776 -32.7%
S&P 1447 903 -37.6%
Nasdaq 2610 1557 -40.3%
Nikkei 14691 8860 -39.7%
HangSeng 27560 14387 -47.8%
STI 3461 1761 -49.1%
As we see that even though the Financial crisis emanated from the US, everywhere else is hit as liquidity dries up, and export roriented economies like Japan/China/Singapore gets hits badly.
I had already anticipated the a big downward movement in the stock market last year (see my post in August/September 2007), cashing out most of my stocks. However I was lured in March again when stocks dropped 20% (STI) and some stocks I was eyeing dropped 30-40%.
It was a bad move, as with PE of 5 was not a sufficient buffer, where companies can drop to a PE of 2.5 ~ a 50% drop.
My portfolio in FY2008 is down 5.9%, ending with a 43.5% in stocks, 11% in FD and the rest in cash 44%. However, my performance should not mask my longs which was massacred, down 50% to 80%.
My biggest company 39% Celestial is now priced at 37 cents, at a PE of 2.5. It is fundamentally sound and although it is expected to be hit with the current downturn, I believe it is a multi bagger in the making. It has a strong brand recognition in the retail market for their beverages and nutrifood. With its new investment in candies and protein milk, I believe it can capture greater market share and propel to greater heights. In a downturn, I will probably have to aim for PE of 3 for small caps.
My next company is SMRT 3% now price at 1.65. I was holding it and expecting to average down but did not due to its PE is still high 15 . However it is recession proof which will give me a dividend 4.7%. Some things to consider, tourists numbers are falling, in recession, more people will stay at home in Singapore. Some people may give up their cars for public transport.
Macquerie now consists 0.6% of my portfolio, dropping from 1.02 to now 0.295 . It is indeed a horrible drop. I have thought that with a infrastructure fund, it is relatively recession proof. What went wrong ? This is actually a fund investing in infastructure. Thus, it has a debt of its own + its investment have extra debts of their own. In a credit crisis, it will have a double whamming, where both the parent fund and the subsidary itself will have to face risks of refinancing. Where to go from here ? MIIF has indicated that it will pare down debt and reduce its payout ot 3 cents half yearly. This translates to a dividend of about 20%. I have not made too much movement because by the time I realise this, it is a bit too late. At this price, it is not worth selling. If this goes down further, I may contemplate averaging down. Lets see what 2009 brings.
Darco dropped 83% from my purchase price of 34 cents to 6 cents. It has a high visibility of book orders and have been making inroads in Middle East. What went wrong ? A poisonous convertible which is highly disadvantageous to Darco. The agreement lets the issuer convert shares at a discount at at the market and they can just dump it in the open market. The conseqences shows that the share price plunging with itself a not very liquid stock.
Why did they go into such an agreement ? I have really not much idea, maybe it was hard to raise money. This consists 0.2% of my portfolio.
My strategy this year was to keep most of it in cash, but divered to buying stocks and shorting futures. My latter strategy did not do too well, as my longs was around 60-70%, and shorts around 30-40%. My longs also dropped about 50% while my shorting of indexes only dropped 30-40%. What helped me was a trading strategy and pure luck where I was able to hold my shorts where they made the most movement. It is luck as there were many times I wanted to close my shorts when the stock market went down quite alot. For eg, I was luckly to have a position in place when the FED initially did not approve the 700 billion bailout. The major markets dropped 6-7% that night.
Since last christmas it has been rallying on low volume. I closed my short (from the announcement of the Auto bailout S&P 890) at 868. I expect that stock market should recover after a horrible Aug till Nov. With volume light, stock market might be trending up. Anyway the risk is getting higher for shorting and I have to be careful about shorting.
For 2009, I believe we are not out of the woods yet. It will be another challenging year and expect another volatile season. Obama will be inagurated as President of US on 20 January, and will be expecting Congress to sign the stimulus package.....
Here wishing my family and friends a Happy New Year.... good health and prosperity
Many billions and trillions were lost in this year as we see many stock market crashed in one of the worst financial crisis and looming economic crisis.
DJI 13044 8776 -32.7%
S&P 1447 903 -37.6%
Nasdaq 2610 1557 -40.3%
Nikkei 14691 8860 -39.7%
HangSeng 27560 14387 -47.8%
STI 3461 1761 -49.1%
As we see that even though the Financial crisis emanated from the US, everywhere else is hit as liquidity dries up, and export roriented economies like Japan/China/Singapore gets hits badly.
I had already anticipated the a big downward movement in the stock market last year (see my post in August/September 2007), cashing out most of my stocks. However I was lured in March again when stocks dropped 20% (STI) and some stocks I was eyeing dropped 30-40%.
It was a bad move, as with PE of 5 was not a sufficient buffer, where companies can drop to a PE of 2.5 ~ a 50% drop.
My portfolio in FY2008 is down 5.9%, ending with a 43.5% in stocks, 11% in FD and the rest in cash 44%. However, my performance should not mask my longs which was massacred, down 50% to 80%.
My biggest company 39% Celestial is now priced at 37 cents, at a PE of 2.5. It is fundamentally sound and although it is expected to be hit with the current downturn, I believe it is a multi bagger in the making. It has a strong brand recognition in the retail market for their beverages and nutrifood. With its new investment in candies and protein milk, I believe it can capture greater market share and propel to greater heights. In a downturn, I will probably have to aim for PE of 3 for small caps.
My next company is SMRT 3% now price at 1.65. I was holding it and expecting to average down but did not due to its PE is still high 15 . However it is recession proof which will give me a dividend 4.7%. Some things to consider, tourists numbers are falling, in recession, more people will stay at home in Singapore. Some people may give up their cars for public transport.
Macquerie now consists 0.6% of my portfolio, dropping from 1.02 to now 0.295 . It is indeed a horrible drop. I have thought that with a infrastructure fund, it is relatively recession proof. What went wrong ? This is actually a fund investing in infastructure. Thus, it has a debt of its own + its investment have extra debts of their own. In a credit crisis, it will have a double whamming, where both the parent fund and the subsidary itself will have to face risks of refinancing. Where to go from here ? MIIF has indicated that it will pare down debt and reduce its payout ot 3 cents half yearly. This translates to a dividend of about 20%. I have not made too much movement because by the time I realise this, it is a bit too late. At this price, it is not worth selling. If this goes down further, I may contemplate averaging down. Lets see what 2009 brings.
Darco dropped 83% from my purchase price of 34 cents to 6 cents. It has a high visibility of book orders and have been making inroads in Middle East. What went wrong ? A poisonous convertible which is highly disadvantageous to Darco. The agreement lets the issuer convert shares at a discount at at the market and they can just dump it in the open market. The conseqences shows that the share price plunging with itself a not very liquid stock.
Why did they go into such an agreement ? I have really not much idea, maybe it was hard to raise money. This consists 0.2% of my portfolio.
My strategy this year was to keep most of it in cash, but divered to buying stocks and shorting futures. My latter strategy did not do too well, as my longs was around 60-70%, and shorts around 30-40%. My longs also dropped about 50% while my shorting of indexes only dropped 30-40%. What helped me was a trading strategy and pure luck where I was able to hold my shorts where they made the most movement. It is luck as there were many times I wanted to close my shorts when the stock market went down quite alot. For eg, I was luckly to have a position in place when the FED initially did not approve the 700 billion bailout. The major markets dropped 6-7% that night.
Since last christmas it has been rallying on low volume. I closed my short (from the announcement of the Auto bailout S&P 890) at 868. I expect that stock market should recover after a horrible Aug till Nov. With volume light, stock market might be trending up. Anyway the risk is getting higher for shorting and I have to be careful about shorting.
For 2009, I believe we are not out of the woods yet. It will be another challenging year and expect another volatile season. Obama will be inagurated as President of US on 20 January, and will be expecting Congress to sign the stimulus package.....
Here wishing my family and friends a Happy New Year.... good health and prosperity
Monday, December 22, 2008
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.
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.
Monday, December 8, 2008
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.
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)
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)
Monday, November 17, 2008
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 %.
• 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 %.
Saturday, November 8, 2008
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.
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.
Subscribe to:
Posts (Atom)
