Bear Market Rally Is Ending !!!

May 7, 2009
To gauge whether this is a bear market rally,let’s recollect some of the comment given by the pros:
 
 
George Soros
“It’s a bear-market rally because we have not yet turned the economy around,”. “This isn’t a financial crisis like all the other financial crises that we have experienced in our lifetime.”

 

 

Warren Buffet

” Yeah, it would be too soon. We are not reaching the end. At some point, we’re going to reach the end and I don’t know when that will be, but I know whatever the day is, May 4, in terms of the figures we’re getting out of all our businesses. The American economy is very slow and at the moment and, still getting slower. But that will turn and I can’t predict when. I hope it’s very soon. “
 
Wilbur Ross, Chairman and CEO, WL Ross & Co, said
 “the US government’s stimulus programmes have prevented the economy from going off the cliff. But was quick to add that the revival in the US economy will take time.He feels a V-shape recovery in the near-term is unlikely. “
 
Tan Teng Boo
 
“We are in the early stage of a bull market.”
IMF
 
“the economic outlook for the Asia and the Pacific region will take longer than other parts of the world to recover from the global slow-down”
Volume in KLCI has been surging but the index is directionless now. That’s why the index gain so little with such a huge volume.I think small investors are jumping into the market and big government funds are selling their shares now.
This situation may continue for quite a long time because the funds which are holding huge volume of shares can only sell a billion shares per day.
The big funds can’t sell them at once because the volume can’t be taken by small investors in a day. They need to do it slowly to avoid massive selling in the market which may spook small investors. If small investors turn their heads away,big funds will be unable to unload their shares.
I believe the funds still need a few weeks to unload their shares to retail investors.When all the shares have been unloaded into the market, the KLCI index will start to drop slowly but daily. This happens because small investors who are mainly speculators/traders/pigs , will wait for huge rally so they can sell their shares at a profit. But what if the huge rally does not come (the number of sellers > the number of buyers)?
Small investors will unload their shares to cut loss/margin call. Other small investors will panic and when all of them sells,massive selling will be induced.
This is how the big funds architect the ups and downs of the market. Small investors have to go back to work,save some money and come back to play again when the market is UP again.   
It’s an ongoing cycle which keep most of us working for the rest of our life.You can’t really go against big funds which have a team of professionals plus big capital.
These big funds don’t have to compete against each other because the number of PIGS to be slaughtered are enough to fill their hunger.They just have to coopoerate with each others to push up the market.It’s not an open/efficient market here in Malaysia when the whole market is monopolize by government controlled vehicles.
Do you think you can beat them in the game of investing?Well,think again.
READ MORE FROM THIS BLOG
Advertisements

Bursa Malaysia Is Too Expensive !

April 25, 2009
market valuation

market valuation

 
According to various research house (international & local included), the current market has been overbought. Please click here for a copy of these reports.
 
Let’s look into the valuation of Bursa Malaysia. Earnings of Malaysian companies will moderate in 2009 but their share prices have been going up and up. This has caused the forward market P/E to breach 16x. In January 2009,the forward market P/E was around 13x. P/E of 16x is actually the average P/E for Bursa Malaysia for the past 9 years but with current economic crisis, the P/E should be below 16x. Frankly speaking,I will value the whole market at 12x only. 
 
The sharp rise in the share price is not supported by any good fundamentals. Most of the Malaysian companies have yet to show losses as their annual reports will be out around June 2009.But if you investigate into their quarterly reports,you’ll see that most Malaysian companies have shown sharp drop in their revenue & profit in Q4 2008 and Q1 2009. Hence,it’s matter of time for the bear to rule again.
 
So what cause the market to go up so fast? My group of friends (who are analysts) discussed & have several explanation for it.
 
a)  Political power which requested inflow of public funds,  trust  funds and ‘Foreign Direct Investment’ which is ‘proceeds’ belonged to some politicians parked in overseas banks.
 
b)  Human Greed: Retail investors who are actually market followers (PIGs) have been ushered by mass media to jump into the market now. When retail investors start to trade actively and confidently, big funds mentioned above will quitely and slowly sell their holdings to retail investors who are mostly ‘Uncle and Aunties’. This has pushed the volume to 1-2 billion several times.
Big funds exchange their paper money (shares) with real money (invested by retail investors). This is a great way to ‘collect’ money from the public. Who needs ‘EPF’ and ‘PNB’ anyway?
 
c) Foreign funds who have fled from the West into Asia. Foreign funds know that the current economic crisis is still with U.S. Therefore,it’s better to park their cash in Asia which has large pool of surpluses.These funds will pull back anytime especially right now, when market valuation in the West start to become more attractive than Asia.
 
I advise my readers to take their profits now. Even Mr. Tan Teng Boo is smart enough to sell his funds’ holdings. What are you waiting for?
Latest disposal by Capital Dynamics

Latest disposal by Capital Dynamics

 
 
 
 
 
 
 

ICAPITAL

November 21, 2007

When I read the blog about how good is ICAP in Ah YAP, i took a few weeks to research about the company. This blog is on the research outcome.

We need to look at two sides of the coin here; just to make sure there are no two heads or tails. My research started with looking at the advantages and disadvantages of a closed-end fund in general. Since icapital.biz website overemphasized on the advantages side, you cannot really find any useful there. So, i go to Closed-end Fund Association .From a non-bias third party view, you can see what is a closed-end fund in details. Compare ICAP with other international closed-end funds, what do you understand? Please read more from the website.

After reading about closed-end fund, i go into researching about ICAP. The first thing i tried to find is the prospectus from Bursa Malaysia. To my disappointment, I cannot find any from the internet. If you have a copy, please post it here. Usually, a prospectus will contain a section called, ‘Risk Involved in Closed-end fund’. At the end of the prospectus, you will see disclaimers. Read it if you have it.

The nearest source is the annual reports. From two annual reports of ICAP, I noticed a few issues which I think, are important to highlight them here. I will show you the page to find the information, sections and excerpts.

 Want me to send updated articles to your inbox?

1. Icaptal.biz was listed 2 years ago on 19 Oct 2005. Whatever ICAP is doing, it will be under scrutinised by Bursa starting from that date only. Before the listing, ICAP self-claimed in here about the performance of Capital Dynamics without any supporting documents or evidence. No one can certify the performance of Capital Dynamics before the listing of ICAP. Since ICAP is has two years of track record only, I cannot make any good judgement about the fund. By the way, did you read the disclaimer in the website? Past performance is not an indication for future performance. See it here:

  

…..continue here.