Stock up, bullishness decrease. Why?

Flip flopping news on media are giving us very confusing signals. Bailouts, not so bad economic data, etc. The most important of all, though many markets have fallen a lot particularly in Europe, Hong Kong, Japan, etc. There are also markets that holding up very well like the US, Malaysia, etc.........

I found a very interesting chart recently. S&P 500 index up but strategist's stock allocation down. If the market direction and bullishness are going up in the same direction then it is something to be worried. If we were to flip the argument, is this telling us everything is okay and even downside risk is relatively minor?

At this point of time, I believe most people are still in the wait and see mode. Undecided - nobody has strong enough motivation to sell or buy. 

Bottomline: strongest market  leaders will have to correct at least 10-15% from the recent highs before picking up stocks, value stocks included.

Global Stock Market Indices PE Ratio At a Glance – 6 June 2012

Posted on June 6, 2012 by Marubozu

3 Votes, Ave 5/5

Market Indices PE Ratio for Major Stock Exchange globally.

• US: Dow Jones Industrial, S&P500, NASDAQ, Russel 2000
• Europe: FTSE100, CAC40, DAX
• Asia: KLCI, STI, HangSeng, ASX200, CSI 300, JCI, SET, KOPSI, NIKKEI 225

May 2012 Stock Market Indices PE Ratio

Many have to fail in order for the few to succeed

We always look up to the successful people in our society. We try to learn and replicate what they do so that we can be successful as well. Is it all that simple?

There is one Warren Buffett, the world’s best investor of all time. The only investor that made to the Forbes richest man without founding or running a business. Take a trip to the bookstores or do a search on the internet and you will find overwhelming information about him and his investing principles. Investors who want to be successful should learn from the best in the world. Is it true?

I remember reading somewhere (should be The Snowball) about Warren Buffett giving a lecture on investing in his early days where he mentioned about having to choose one company out of  thousands in the same industry. At that point in history, there could be many others who invested in the other stocks and had valid reasons for their choice as much as Warren Buffett. But most of them had lost money. We never know who lost but we remembered Warren Buffett’s stellar investment performance. Why are we so blindsided by the success example and forget that many have to fail in order for the few to succeed?

This survivor-ship bias is prevalent since we pay more attention to success than failure. Probably because humans seek pleasure and avoid pain, so we prefer to see more good examples than bad ones, and the media happily feed us with that. The truth is, there are always so many more failures in order to have a success. And our capitalist society works like this – it must encourage enough people to start businesses and hopefully under the law of large numbers, less than 10% will make it to become the largest corporations and the society will still progress because of them. Capitalists will say this competition is good because the surviving company beat the rest to provide the best product or service to the society.

This is what makes stock picking very hard. How do you find the next great company? Let’s say you are bullish about the IT industry and you believe ABC is going to dominate the future market (even the CEO does not have the same confidence as you). After buying ABC stock, you will end up with what psychologists termed as confirmation bias – you look for facts that support your decision and ignore the facts that do not. Regardless how confident you are, the odds of you picking the wrong stock remains high.

So it is a false sense to think that we have control. We give too much credit for our own successes. What we fail to recognise is the role of chance in our life. Starting from a sperm, we have to compete with so many sperm comrades to reach the ovary. Thereafter, it depends on the genetic makeup to determine if we end up as male, female, or anything in between. The unlucky ones may be born with deformities and we all will have varying IQ levels. Next, the environment we grow up in and the education our parents give us are different. The school that we go to, and the friends we sit next to, all had a part to play to alter our course of our life. Warren Buffett is unique and it just happened that his genetic makeup (he is very good with numbers), inclination (loves business and investing), and experience (learned from Benjamin Graham and partnered Charlie Munger) come together to make him a successful investor.

Can you be a successful investor? The hard truth is likely not. But that does not mean you do not try. Just like entrepreneurs, if everyone stops trying to start a business, we will soon run out of employers. On the other hand, if you try to take the risk to start a business, you have a very slim chance of succeeding. Likewise, investing is risky, many will lose money to the few.

Is the stock market rally over?

So, the indices of the world are now in negative territory, with many falling below their
200-Day MA. Technically, this should be the end of the bull market, and the start of a new bear market. But not yet, I think.

Reasons are:

1. Sentiment indicators are very bearish (this is a bullish sign)
2. Political stabilisation in Europe could occur soon
3. Stocks tend to trend higher during a US Presidential election year
4. Stocks are still cheap (low PE and PB), and Chinese stocks are probably past their lowest point in October 2011

At this juncture, I am fully participating in the GSS (Great Stock Sale).

My positions:

Noble
NOL
Semb Mar
Wilmar
Yanlord

Will be adding more in the next few weeks.
Posted by c0ntrarian at 11:15 PM 

《富爸爸窮爸爸》作者預言 全球經濟4年後崩潰

（吉隆坡28日訊）《富爸爸窮爸爸》作者羅伯特清崎預言，2016年全球經濟體系或崩潰；許多國家靠印刷鈔票來支撐經濟轉動，但“錢將不再是錢”。

　受本地發展商Andaman集團前來大馬分享房產投資心得的羅伯特清崎說，現今各國都欠債累累，根本無力償還；歐美債台高築，現今是靠中國帶動市場。

　但最新數據顯示，中國出口成長5%，進口卻是零成長。對倚靠外銷至中國維繫經濟成長的國家而言，這不是個好預兆。

　“德國揚言挽救歐洲經濟，但德國也是以出口為業，這個說法並不能實現。”

　羅伯特清崎指出，一旦中國停止進口，其他出口國家必受衝擊。

抨多國經濟措施

　“馬來西亞也以出口為主，必須考慮在中國停止進口之后，會出現怎樣的衝擊。”

　雖然中國現今主導全球經濟，但他不看好這些主要經濟體系能夠解決困境，預言這些國家如中國、美國、歐洲都正一步步走向崩潰。

　他抨擊多國政府挽救經濟措施出現根本問題，國家缺乏財經教育是最大主因；唸書已經不能為人們帶來穩定的經濟來源，反而是一條死路。

　他說：“太多人不了解金錢。”

　羅伯特清崎在全球86個國家都有投資如黃金和銀，他指金錢不再有任何作用，隨時貶值。

　他更預言，2016年將有一家美國銀行損失100兆美元（約310兆令吉），其他銀行跟進，連接整個經濟體系將會崩潰。

　“對某些人來說，這是一個絕佳時機。”

‘China’s Lady Buffett’ On Shopping Spree

‘China’s Lady Buffett’ On Shopping Spree

Written by Sinafinance
Saturday, 19 May 2012 09:03
Translated by Andrew Vanburen from a Chinese-language piece in Sinafinance

"CHINA'S LADY BUFFETT" is enjoying a "Chinese Buffet" of her own, picking from a wide variety of bargains on the Hong Kong Stock Exchange.

Liu Yang, nicknamed the local version of the famous Nebraska-based investor, has gained great fame and respect for her fabulous success in the regional capital markets, and says her sentiment is just fine, thank you very much.

That's despite currently being in possession of some seriously underpriced shares that need to add alot of value before Liu even hopes to break even on them.

Ms. Liu says she adds to her portfolio daily, and has already spent 2.3 billion hkd buying shares in Hong Kong this year alone.

“I buy shares every day. The lower they go, the more I buy,” she said.

Despite the benchmark Shanghai Composite Index in China being down nearly 20% from a year earlier, and Hong Kong’s Hang Seng Index not doing much better, “China’s Lady Buffett” says she is “confident and not intimidated” amid the current market downturn.

She said that recently, the Hang Seng benchmark index fell by 153 points but the big funds didn’t jump in right away.

This left her free to patiently wait on the sidelines as the share price in one of her favorite counters -- Renhe Commercial Holdings Co Ltd (HK: 1387) – a developer of underground shopping centers in China converted from underground civil defense shelters – fell another 11%.

“I watched the price fall lower and lower, and all I could think was... ‘Buy!” she said.

As of Tuesday at market opening, the Hang Seng Index had fallen for eight straight sessions but with the surprise on the upside for Germany’s macro data – the EU’s largest economy – Hong Kong shares jumped by nearly 1%.

Once again, “China’s Lady Buffett” had outmaneuvered the market and jumped in headfirst at just the right time.

But she better find a comfortable chair because the property developer's shares have already fallen over 62% so far this year and it will be a long haul before Liu reclaims her investment.

Liu’s Atlantis Investment Management now holds 6% of Renhe Commercial, a fitting shopping play for a master shopper.

However, she was adamant in a phone interview that she was a long-term shopper, in this case.

“Many people say I’m about to dump Renhe shares. Why would I sell? I definitely won’t sell. I’m still buying Renhe shares,” she remonstrated.

She emphasized that she felt that Renhe Commercial was fundamentally sound and was in her opinion was the best bargain in the real estate sector.

Reaffirming her oft-repeated pledge that she is oblivious to market rumors when making buying and selling decisions, Liu said: “I am fully confident on this decision. Therefore, I can tell you with firm resolve that since January first of this year, I have already put 300 mln usd into the market. In fact, I add to my portfolio every day, buying more with each price drop.”

That being said, “China’s Lady Buffett” may have to wait a bit longer to enjoy the fruits of her shopping spree labors.

That is because the firm she runs -- Atlantis Investment Management -- as of May 14 has a return on investment performance of (-10.8%).

Her accumulation of Renhe Commercial has been the biggest drag on Atlantis Investment’s year-to-date performance.

Other major anchors pullling down Atlantis' performance of late have been coal play Hao Tian Resources (HK: 474) and tech consulancy Hi Sun (HK: 818), both of which are major possessions of Liu and which have fallen by 67.3% and 49.1%, respectively, since the start of the year.

But knowing what we do of Liu’s shopping expertise, the decision by “China’s Lady Buffett” to stock up on shopping counter Renhe's shares may end up once again surprising us bystanders down the road.

Source/Extract/Excerpts/来源/转贴/摘录: http://www.nextinsight.biz
Publish date: 19/05/12

Euro zone & Greece Exit

Personal Market View - HSI bottom out finally on 2012/05/18?

HSI bottom out finally on 2012/05/18? 

by ckchoy

Today is an interesting day. Refer to chart 2 - intraday, where HSI hit a bottom around 18600 and rebound about 400 pts before dropping back slightly.  This is a scene that has not happened before recently. 2 questions;

1) Could the bottom found here? 2)Will the trend starts to reverse up?

Bottom out?

1) First sign met where HSI hit a bottom and rebound 400 pts and stayed, a very good sign

2) If market stay resilient ( refuse to drop much ) despite bad news - this will be another good sign

Trend will reverse up?

3) If market can slowly trend up and market volume must continue to build up and improve

What does it mean?

If the rebound is purely technical ( due to oversold ), it may not mean such bottom found then we must rush in to buy. Because the bottom might have found but still need time to build up a sustainable uptrend, and it may take time, let's say another month to 3 months.

What should we do now?

1) We can use the HSI 18600 as reference and buy when prices near there. For specific counters, we can use the lowest points as guideline, eg today lowest for Kepcorp 9.8, NOL 1.00, YZJ 0.91 etc.

2) For conservative investors, take your time to buy, if possible get as close as today's lowest point. Watch whether volume improve for better confirmation that market is ready to reverse up.

How about HSI breach down 18600 again?

Technically, we should cut loss. But do observe and come back because we may not be too far from the bottom.  A better ( but not easy to follow ) way is to use buy-cut-buy strategy

chart 1 - daily

 chart 2 - intraday

Personal Market View - HSI and sg market update 2012/05/11

HSI and sg market update 2012/05/11 

by ckchoy

As usual, today market was in selling mode with some tug-of-war actions during the start of the day, but overall the trend was down. 

About 1.30pm noticed a sharp sell-down on HSI upon China's data release, output data below-view. And the bottom was formed around 2.10pm. This could be a capitulation bottom. Sometimes capitulation may not necessary must represent a high percentage drop ( like 5% or more ) in one day, it could be when many bad news has been released. Finally market waited all the bad news out before re-enter again.

Some counters beaten down during the sharp sell down hour like shipping sectors: 

NOL - sold down quick from 1.115 to 1.085 and rebound

Semmarine - 4.58 to 4.51 and rebound

Kepcorp 10.3 to 10.17 and rebound

Cosco 0.945 to 0.92 and rebound

Some counters/sectors were firmed during that period like property Capland and Noble.

Capland remained at 2.65, instead firmed up upon the news and closed at near high today

Noble remained at 1.15 before rebound to 1.16

Even though this may not be the bottom, but looking at some counters in STI, many already cheap in price ( use P/E - do your own homework ). The low(s) is(are) near.

What do you think? 

Be Brave

Be Brave.

Posted by la papillion under Self-realisation

A student of mine recently got 'scolded' by me. She was trying to solve a physics problem but she had no idea how to do it. I had a glimpse of her thinking when I asked her to think out loud. She said after doing this and that, she had no idea what to do. Then I realised that she is trying to figure out entirely the solution of the problem in her head before she even attempt it on paper. I told her severely that perhaps in simpler problems, the entire steps of the solution can be visualised before attempting it. That would be the ideal case, wouldn't it? You would have the confidence to go through the entire process of writing down the solution since you already had in mind what you are going to do next.

However, I told her, that as problems get increasingly complex, it's nearly impossible to figure out all the steps that you're going to do without at least writing down some stuff. As long as you some clues on how to do it, you should just proceed to write something and find out whatever you can from the clues, then let the things you had worked out provide further leads. This trial and error kind of behaviour in doing things would separate the good from the bad students. The good students simply tries something that they know in order to arrive at something that they don't know, whereas the bad students need to know everything before even attempting it. When they can't figure out a step, they won't even want to do the first step. The good students have the confidence to know that they would be able to innovate and improvise along the way to hit their objectives.

I was wondering how many of us are also doing that in our lives. Most of the time, we fear the unknown so much. But understand that fear drives us to either want to find out more about it or paralyses us straight there and then. No matter how much we research, there'll be a moment where you just have to press the trigger and decide to proceed on with the best knowledge that you have at that moment and just jump with leap of faith. How many of us are stumped and paralysed when the first unknown comes along that throw us off our path? How many of us reads all about swimming in books but keeps on postponing the actual act in the pool?

I can also think of many many examples of myself procrastinating objectives that I know would enrich me but because of my fear of the unknowns, I keep dragging doing the first steps towards it. I must believe that even without knowing how I would get to the end, I would eventually reach there. That definitely needs a leap of faith. From what I see, there's two ways  to get it - one is from religion, the other is by a similarly zealous belief in yourself. Both are not necessarily mutually exclusive.

Have courage, my friends. Be brave.