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

What is Value Investing? Part 9

June 12, 2007

There you have it,eight parts on value investing. Part 9 will touch on corporate governance. But this part will be explained by my fellow friend, Ben McClure.Anyway, Who is this guy?

But before we go to that topic,let’s learn about The Basics of Corporate Structure.

In summary,

Step 1: Read ‘Who is this Guy’?

Step 2: Read ‘The Basics of Corporate Structure’

Step 3: Read ‘Corporate Governance’

….continue


What is Value Investing? Part 8

June 3, 2007

Now,you need to read all audited financial statements provided by the KLSE. Take extra notice on the foot notes and analyze financial ratios in the financial statements. You might need to study about financial statements from Investopedia and other websites.

Summarize all the computation on the financial ratio and % changes from year to year. Dig more information if there are large increment/decrease in any figures. Get to know what the company is trying to hide behind the financial statements…(continue)


What is Value Investing? Part 7

May 27, 2007

Now,you should have calculated annual EPS growth (from Part 4), understood a company’s strength,weakness,opportunity and threats (SWOT) (from Part 5) and analysed financial ratios in financial statements (Part 6). Next is to dig further into the management of the company.

Well, there are cases which companies were investigated by S.C on irregularities in annual report and some CEO are investigated for corruptions.As a value investor, you should put  these companies away from your portfolio. Remember, it is ……(continue)


What is Value Investing? Part 6

May 13, 2007

The 3rd criteria is to recognize ‘EPS Manipulation’ in financial statement.Before buying a share, read the ‘Notes to the financial statement’. Get to know how the company define its sales, expenses, debt and others. Look for irregularities in the financial statements such as extraordinary write off, special expenditure and so on. This means you as an investor must question every ‘weird’ numbers in the financial statement. Each financial statement will go through an artist work (by the accountant) to hide any ugly sides of the company.

For example, a company can declare its sales before the products are sold to the end users. This means the company declares its revenue before it receives the cash or before the cerdit term expires. By doing the ‘art work’, the company can significantly increase revenue, reduce expenses and get a better EPS. 

(continue)


What is Value Investing? Part 5

May 8, 2007

The second criteria is a synergy between the management & political influence. A company with the best management team will fall if the current government policy hinders the core business operation. NEP policy towards certain industries must be given great attention. To stay updated with the economy news, get different views from the local media, which are controlled by the government & oppositions’ sources.Relying on one source is an act of a fool.By analysing different views from both sources,a better investment decision can be made.

A company’s business operation is largely affected by the change in the government policy and law.For example,if the price of a product/service is tagged by the law,then the company can only increase its net profit by reducing the expenses,increase efficiency or ….(continue)


What is Value Investing? Part 3

April 24, 2007

Given all the problems in KLSE,how should one invest? Some investors prefer short term investing/speculative investment such as options and warrant. In speculators’ opinion,short term investment is not affected by corruption and political decisions. This is true.But how many of us are professional traders?How many of us have a CFA?

CONSERVATIVE analysis couple with long term investment can also reduce the effect of inappropriate decision by the company.When one has made profit in the stock market,he should ‘lock’ his profit in bond.The proportion of portfolio should be ….(continue)