Identifying Your Fund Manager Styles

Reading the Business Times this week, I came across an article within that had some pointers on creating an investment portfolio. While reading it though, it came across as quite generic and brief. As such, I pulled out the only section that I felt had some value - a section on knowing your fund managers investment style. 

Why is this important?

The author, Mr. Edmund Teo, regional director, investment solutions, Asean, Hong Kong, Taiwan, and India at Russell Investment, says that "investors need to understand the style of different managers in their portfolio, and why they under or outperform in different market conditions. Employing manager and investment style diversification is critical for reduced volatility across market cycles." Perhaps, it may be good to give them a ring to find out their approach.

In the article, Mr. Teo listed 3 types of styles. I would like to add a fourth. 

1) Growth managers

These managers focus on companies whose earnings are growing faster than average. Often, these fast-growing companies will reinvest their profits back into their business, so the dividend yield (if any) could be lower than market average. But note that if growth slows, their stock prices are more likely to fall harder than average. 

2) Value managers

These managers look out for and invest in undervalued companies whose true value has yet to be recognized which therefore gives the share price potential to rise upon realization by the market. They believe in the saying, "buy low, sell high". Often these companies are solid, but not spectacular performers with good cash flows and at times with dividend yields above market average. The risk of investing in undervalued companies is that these companies may remain undervalued for extended periods of time with no indication when share prices may rise.

3) Market-oriented managers

These managers focus on themes within the market and the economy to decide on the companies to invest in that should outperform market averages. For example, if the manager feels that the Singapore dollar is about to rise, he or she might focus on increasing positions in companies that import goods while reducing holdings in companies heavily reliant on exports. The risk of this style is that themes can have short lives and catch investors unaware.

4) Momentum managers

These managers look out for hot stocks and for stocks that though have risen a fair amount still have fuel to rise even higher. They believe in the saying, "buy high, sell higher". They look for companies that have made new highs, and/or show strong upward trends based on technical analysis. Constant positive earning surprises is one other criteria these managers scan for. The obvious risk is that prices are constantly undergoing corrections when prices rise too drastically. As such, momentum investing could go against managers who mistime the entry of their purchase.

Hey, if any of you know of any more styles than is listed here, pls feel free to leave a comment below. And if you're willing, it'd be great to hear your investment style as well. =)

Cheers,

~K

Learning to Trade

Slightly more than a week ago, I decided to try an experiment with myself. As I've never tried trading before, I wondered how I'd fare in the attempt so I decided to test out my ability. 

This led me to scan a couple of stocks and "stock pick" so to speak, based on indicators. Each transaction is noted down in an excel sheet to allow as accurate a record as possible.

As to the names of the stocks I'm too bashful to say at this time. I've "added" another 2 counters over the last two days though. Suffice to say that in a week plus, the portfolio seems to be performing quite well. Well, better than I expected anyway. Nonetheless, It's just a personal test, with nothing to boast about. A personal challenge. 

My aim in this private experiment is:

1) To see how well indicators work and which indicators work for each stock (and for me)

2) To experience what it's like to trade

3) To learn what is important to do for each trade

4) To build up some confidence in the trading area

Like most experiments, there are limitations. First of all, there is no actual money involved so my emotions are held in check without much trouble. I realize this. That said, even if I do do really well, I'm not going to plunge into it and bet the house. I also realize it's a gradual process of being able to handle each trade with a sum of cash that isn't going to cause me to lose sleep over. Secondly, I'm also not going to be able to learn to handle loses, which is more important than handling winnings, so I've read in many articles, blog posts and books. This is why if and when I do decide to trade on a month to month basis, I'll start in small amounts to further build up my confidence and competence.

I will be fine tuning this little experiment along the way the more I learn. So hopefully, in time, I'll be proficient at another way to generate income. 

Wish me luck,

~K

P.S. By the way, any tips on how to start trading efficiently or trade in general would be most appreciated so feel free to leave as many comments as you please. Many thanks in advance. =)

Robin Griffiths: What's Keeping the U.S. Market Afloat and Other Issues

To continue from the last post, here's an earlier interview (dated Sept '10) before the broadcast at King World News that I posted earlier. Though this is 4 months delayed news, you can still learn quite a bit from Robins Griffith.

In it, Robin Griffiths touches on several issues. 

On the Best Sept and What's Keeping the U.S. Equity Market Afloat

00:30 : One of the things keeping markets afloat "is something called Permanent Open Market Operation ... (POMO) ... what happens is the Fed buys treasuries off the banks pushing the money into the banks. The bank pushes the money into the market. They do about US$6billion a day when they do this."

00:50 : "That amount of money turns the algorithms up. Then all the algorithmic trading hits the market. Real life human investment managers are not doing this buying. They know that after the rally that we've had, we're back to where we were first in 1998."

01:07 : "Equities are for losers and if you're priced in dollars, you're down 30% over that period." 

01:12 : "So real life equity market [investors] still don't want to buy the S&P. Is still being affectively goosed up by what we used to call the Plunge Protection Team. Well they can keep doing this for a bit longer but I'd only be completely wrong if they do it so much that they take out the April high. According to me, that April high will not break and we are going to inevitably go down."

The U.S. Economy, the Recession and What's In Store

01:40 : "Last week we heard the president say in clear words that although we had ... an economic institution saying the recession was over 9 months ago he accepted that for many Americans the recession is still an ongoing reality. And secondly all of those Keynesian stimulus didn't work. We're changing the entire game plan and what's going to happen is the Fed is going to be printing money and pumping it into the economy to try and let it down slowly.

On Bonds and Bubbles

02:12 : On 30yr bonds, "the yield is going to go down. Now if you buy the 30yr treasury bonds as the yield goes down, you make money."

02:23 : "There's an old saying that goes don't fight the Fed. Well now the Fed is going to guarantee that your bonds go up."

02:42: "They've backed up. They had to back up. If you missed when the yield was approaching 4%, you aren't going to double your money as it approaches 2%. But even now you should be buying bonds and not equities. And it's not a bubble."

02:57 : "It will be a bubble when your viewers all write in and say we've all got bonds what do we do now?"

03:03 : "And the bubbles never burst when wise heads in media tell you its a bubble that's going to burst. It burst when they've given up on that and tell you ah this time it's different. So you should in fact be in bonds and not in Western equities."

On the Bovespa and Emerging Markets

03:29 : "These are the markets you should have been in. Where the American market has gone virtually nowhere for the last decade, the [Brazilian] Bovespa has been up 1000%."

03:37 : "Including China and India ... these are where you should be putting your money."

03:50 : "This is the real deal where people have been working hard to take themselves out of poverty, succeeding, and we can back them and we can invest in them. These are equity markets that are real bull markets and that are making all time highs where the ... Western markets aren't going to do that."

04:13: "The Bovespa "is rising at a rate of a 1000% per decade."

Check out the video below for the complete interview, most of which I've already transcribed here. =)

That said, this is the current chart of the S&P500:

I've marked the resistance back in April'10 and we can clearly see that stock prices have gone way beyond that. So was Mr. Griffiths "completely wrong" as he put it in his interview?

That remains to be seen. 

I'm of the opinion that although he may have been wrong in his prediction about the stock market not breaking its April high, if his explanation on why the equity market is propped up is correct and with all the printing of currency, then this still is bad news for the future with the debasement of purchasing power. And to me, the way to protect that it is in physical assets. However, I'm not suggesting you to go all in into physical assets -- no no -- as the future is so unpredictable and we can never be certain who is right and who isn't until the event is over. However, it is recommended that one has about 5 - 10% of his/her portfolio in precious metals and to rebalance every yearly or two. 

Having said that, this video below shows that some of the most well-renowned investors are still piling into gold - Jim Rogers being the most famous. It also explains why gold is still a viable investment asset and why it is still demanded in today's society. As Gold Core Limited is a company, they may have a bias to promote the metal. As such, it is best viewed with an open mind and like attempting a jigsaw puzzle, you have to piece the different parts together to make your own conclusion.

Check it out:

Cheers,
~K

Robin Griffiths on U.S. Dollar Printing, Commodities, Gold, Silver and His 2011 Outlook

Quote of the Week:
"The downward trend in the dollar is awesomely powerful. It's vital to get yourself out of the dollar long-term on any significant rally. Continuing to own a currency that is going to be printed virtually into oblivion ... is crazy."

"I think not owning gold is a form of insanity, it may even show unhealthy masochistic tendencies, which might need medical attention."

~ Robin Griffiths

Background:

Robin Griffiths is Cazanove Capital Management Private Wealth's Technical Strategist. He has 44 years of investment experience and is considered one of the top strategists in the world. Cazenove as a group now manages £15 billion on behalf of their client base and is one of the oldest and most respected names in the financial community, tracing its origins back to the 17th century. Robin developed his own system, analyzing stocks and market trends. Robin is followed globally because of his groundbreaking work on world stock markets, bonds, currencies and commodities.

Here's the complete video to hear his take on the dollar printing and his view on the highs commodities have been making recently that led to the quotes above.

In another interview too, Mr. Griffiths was extremely bearish on the outlook of 2011.

Here's the article:

Cazenove's Robin Griffiths: The October Dip Will Be Nothing Compared To The 2011 Crash

Source: The Business Insider -- Click here for link
Date: Oct 2010

Cazenova Capital Management's Robin Griffith sounded incredibly bearish on a radio interview with King World News. 

He even thinks the September Effect will be validated -- because the real negative historical trend lasts from mid-September to mid-October.

The collapse in the next few weeks will be similar to the collapse from April to July, Griffith says, putting his target for the S&P500 at 940.

If you think that's low, wait till the Alt-A mortgage rate reset in March. "The dip this year is modest. The dip that occurs next year is the one that risks taking major indices right back to where they were in March '09," Griffith says.

The Cazenove strategist has a bearish election prediction too. The market-friendly Republicans will win, but the loss will be so "catastrophic" for the Democrats, it will make Obama an immediate lame duck, hurting the economy.

Oh yeah, and he thinks the plunge protection team was the only thing keeping the rally going in September. 

Broadcast at King World News

Related to the article above, listen to this broadcast of his interview at King World News, dated 02nd Oct 2010, for the complete interview.

The line that caught my ears, "Silver might even be a 10-bagger from here." aka ~$200 per ounce. 

Current price/oz: US$29.25.

UOB current price/oz: S$37.37

Although that may be an exaggerated amount, even a 5-, 4-, or 3-bagger would be a huge delight.

Question of the Day: What are you waiting for?

Cheers,
~K

7 Reasons to Expect a Bear Market in 2011

While it seems that a lot of analysts and people are bullish about the new year, here's an article that states the contrary. 

Cheers,
~K


Taken from an article written by Mr. Claus Vogt of Money and Markets, entitled "The Contrarian View"

7 Reasons to Expect a Bear Market in 2011

1) The stock market is highly overvalued. It follows then that stock investments are nearly guaranteed to deliver poor, long-term returns.

2) The rally since August 2010 isn’t based on sound and sustainable economic factors, but on unsound and fragile faith in the Fed’s ability to inflate asset prices.

3) Longer term interest rates have risen considerably since the Fed’s first announcement of QE2. In the past, bull markets were usually on borrowed time during a rising yield environment — even when fundamentals were much sounder than today.

4) Stocks are extremely overbought when momentum indicators and the number of stocks reaching new 52-week highs stay below their cyclical highs, thereby not confirming the current run up.

5) There is a debt crisis brewing, not just in Europe, but also in Japan and the U.S. The U.S. municipal bond market is already under pressure.

6) The financial sector’s problems have not been solved, but only papered over with money printing and a suspension of mark-to-market (fair-value) disclosure.

7) In China a huge bubble economy has developed. Since Beijing has already implemented a turn in monetary policy, this bubble is prone to pop in 2011, posing a major threat for a still very fragile global economy.

3 Signs the U.S. Market is Approaching Danger Zone

A recent article by Claus Vogt of Money and Markets highlights three danger signs that a crash in the U.S. market may be approaching. I'll summarize below.

Danger Sign 1:

A Major New Debt Crisis Striking Thousands of Local Governments Throughout the United States

To highlight a section from the article, Mr. V states that,

"In prior debt crises, a major central government or bank came to the rescue. This time:

• The Federal Reserve has neither the authority nor the will to come to the rescue; and
• The U.S. Congress is even less inclined to open the Pandora's box that a city or state bailout would involve.

... This one is striking at the very heart of the U.S. economy!

Result: A big threat to the U.S. GDP growth in the second quarter AND to the U.S. credit markets at the same time."

Danger Sign 2:

A Major Divergence in the Stock Market

A key indicator pointed out is "the number of stocks hitting 52-week highs.

• During a healthy, durable bull market, as the major indices move to new highs, there should be an increase in the number of stocks making new highs, as growing number of issues participate. And for the rally to continue, stocks must repeatedly hit new cyclical highs. But ... 
• At the tail end of the bull market, this picture starts to change. The breadth of the move weakens. More and more stocks enter topping formations or start to roll over. And the number of stocks making 52-week highs levels off or actually declines.

...Although the broad indices are still making new highs, fewer stocks are doing so. In other words...

The whole rally depends on a shrinking number of stocks!"

The "negative divergence" is obvious from the evidence presented in the two charts below:

To quote, "As you can see the current move to new index highs is not confirmed by the number of 52-week highs...

The indicator's high for the current cycle was way back in April 2010. So the market is actually showing multiple divergences: A succession of higher highs in the index and ... at the same time ... a succession of lower highs in this indicator...

...the number of 52-week highs is a time honoured indicator. Historically, it has given important warning signs well before a major bear market commenced. Just look at 2007 and you'll see an example of a negative divergence similar to the one we're experiencing now!" 

Danger Sign 3:

Great Overvaluation

This line says it all. 

"The U.S. stock market is severely overvalued ... possibly by 50% or more!"

Put the three signs together and it's wise to invest with caution in the year ahead. What's that latin saying again? Oh yes...

Caveat Emptor,

~K

P.S. If you're interested in the complete article, it can be found here.

Facebook's Expected IPO

By now I'm sure most of us have heard about the expected IPO of Facebook by latest 2012. I too was interested as my opinion is that Facebook is probably going to be to social networking sites what Google is to search engines. 

Why do I think so? Because firstly, I never liked social networking sites but for some reason I sold out and am now on Facebook as well. It's like back in the days of Altavista and Lycos search engines. I used to keep using Altavista despite Google's appearance. And for some reason I just decided to switch over. Google even became a word as in "Don't know the answer? Try googling it." And now, Facebook seems to be used in that context too. "Oh yeah I uploaded my pics. You can facebook 'em if you wanna take a look." or "Yeah, I'll be facebooking later. I'll add you then." That's a second sign of the importance this social networking site is becoming.

If I had known about investing back then in the days of multiple search engines, that would have been a big signal to invest my money in Google. That said, I think Facebook may grow like Google eventually for the reasons above. However, would the IPO price be a good price to buy in? For that I like to refer you to this article below written by Ed Pawalec of the Tycoon Report which I found most informative.

Enjoy!

~K

Another Brick in the Wall: Fool's Gold or Value Play?

by Ed Pawalec

News of Goldman Sach's investment in Facebook has been all over the news, so I thought I would play with the numbers a little to see if an impending IPO would end up being a scam or a value play when the company does go public.

The exact financials are vague at best at this point, and can only be guessed at by reports in the financial press, but we can have some fun with this anyway.

The value of the company according to a variety of reports is in the $50 billion range, which some have said is ridiculous. In fact, The Wall Street Journal quoted one former Goldman partner who was offered a piece of the action as saying, "Google's trading at 7 times sales. I'm not going to buy Facebook at 25 to 50 times." Interesting.

The valuation is based on the portion of the company to be purchased in a joint investment by Goldman Sachs ($450 million) and Digital Sky ($50 million) for $500 million. However, Goldman is also reported to have been putting together an additional $1.5 billion through a Partner Private Opportunity Fund, so how they come up with $50 billion is a little unclear. Nevertheless, I'll go with the $50 billion number.

Now, Mark Zuckerberg (Facebook's founder and CEO) is trying not to go public, which requires these investments to be bundled into Special Purpose Vehicles (SPV) so as not to go a foul of the SEC's 500 investor rule. Essentially, this requires any company that has 500 or more shareholders and $10 million in assets to file their financials with SEC, thus making it public information. This rule is rumoured to have been the motivation for Google to go public in 2004. If you have to report publicly anyway, why not do an IPO?

According to the rule, a company that exceeds that threshold must begin reporting within 120 days of the close of the fiscal year in which it reaches 500 shareholders. Since the current offering from Goldman, which could put Facebook over the 500 shareholder mark, is occurring in 2011, and Facebook's fiscal year ends on December 31, the expectation is for an IPO no later than April of 2012.

This might be avoided if the SEC accepts Goldman's SPV as a single investor. The SPV is, in its simplest terms, a group of investors clumped together as a single entity, which then invests in Facebook and is counted as only one investor. We will see how that works out. 

Enough with the background, lets jump into the numbers.


Who says a dollar isn't worth what it used to be?

For 2009, Facebook is said to have earned $200 million on revenues of $777 million -- a tidy 25% margin. For the first 9 months of 2010, reports are that the company is up $355 million on revenues of $1.2 billion -- an even better 29.5% margin. For all of 2010, estimates are for $500 million in earnings, which would suggest revenues of $1.6 billion.

Based on a $50 billion estimated market capitalization, that puts a PE ratio of 100 on Facebook. Seems a little rich by most standards. That being said, stocks frequently trade based on how fast they can grow their earnings and, assuming we can take the $500 million expected for 2010 at face value, Facebook grew earnings at 150% year over year. Maybe 100 times isn't too ridiculous if you make the assumption that they can maintain that growth rate.

Internet World Stats numbers Facebook subscribers at 517 million plus (as of Aug 30, 2010) compared to recent estimates of 600 million. I have to admit, either number is impressive. But, if you think about it: $500 million net income divided by 600 million subscribers means that each subscriber is worth $.83 to Mark Zuckerberg and his investors -- just under a buck per year.

Zillions of man hours wasted on Facebook each year so some 26 year old nerd from Harvard can make $.83 on each user.

Think about that.


Critical Mass

But you have to give the guy credit for finding 600 million people he could squeeze $.83 out of.

Hold on a minute! How many people are on the planet?

Well, recent estimates are in the neighbourhood of 6.8 billion. By 2020 there will be about 7.7 billion people, and most of these would need to be worth at least $.83 for Facebook to be fairly valued at $50 billion today. But you can't have Facebook without the internet, and not everybody in the world is wired ... at least not yet.

Unsurprisingly, the growth in the number of internet users has dropped considerably over the years ...

With the number of users doubling every year during the heyday in the late 1990's, things had to cool down. Over the last five years, growth has steadied to a strong 13-15% annual rate. Again, according to World Internet Stats, nearly 2 billion people have internet access. Almost 29% of the world is wired for the web and 26% of them use Facebook, each worth $.83. 

Now if internet access continues to grow at a 13% rate for the foreseeable future, sometime during 2021 every person on earth will be connected to the web. Yes, you will be able to check your Facebook page from anyplace in sub Saharan Africa, as long as there are people, by 2021 ... maybe not. 

Since Facebook is just about 7 years old, its growth rate has been exponential. For argument's sake, however, let's just say that it can grow subscribers at a 25% annual rate. By early 2023, everyone on earth, who has already had the internet for two years, will now be available for friending on Facebook. 

While this is clearly something to look forward to, stay with me -- I do have a point. In this outlandish scenario, with the world population valued at $.83 a head, and if Facebook kicks all of its earnings back shareholders, it becomes a perpetuity. This means that the present value of the company can be determined simply by choosing a discount rate. Since we are talking about just over 10 years, the approximate 3.4% rate on the ten year note is as good as any. And the calculation goes:

(World Population in 2021 x $.83) / 3.4% =

(7,900,000,000 x .83) / .034 = $192.85 Billion

Before you deem this exercise silly, think about a more feasible scenario:

If by 2021, half the world is wired and half of them use Facebook, using this same crude calculation the numbers come to $48 billion, which happens to be darn close to the $50 billion number being bandied about these days. 

The point here is that Facebook is a unique company in that it actually has the potential to reach the entirety of the internet capable world and therefore, to its detriment, it does have a maximum value that can be calculated. I realize that the company could increase its per subscriber value and that the discount is somewhat arbitrary, but I found it interesting how doing some back of the cocktail napkin math came so close to the value ascribed by the pundits and analysts. 

In any event, at least now you have some idea what it would take to make this company worth $50 billion today.

Jim Rogers Speaks on 2011 Outlook

Happy Friday everyone. =)

Couple of videos of Jim Rogers doing an interview with editor-at-large Chrystia Freeland on Reuters on the 7th of Dec as part of the 2011 Reuters Investment Outlook Summit which I found very interesting and wished to share.

Enjoy!
~K


Part 1



Part 2



Part 3



Part 4

Breadtalk Dips But What Next?

My expectations that prices will bounce by this week hasn't materialized but my hopes that prices will dip to its 50 day moving average has come true. (See Breadtalk Buying Opportunity Soon for initial analysis.) Not only has it dipped, yesterday prices broke through the 50dma and continued heading south today. Mixed feelings about this.

From the looks of the chart, there are a couple of positives and negatives. Let me list them.

Positives:

1) Prices seem to be following an uptrend channel.

2) Price closed at support of $0.61.

3) RSI, Stochastics and MFI are in oversold regions

4) ADX reveals that the selling is not a strong trend currently.

5) Volume is low despite the selling.

Negatives:

1) Prices had trouble breaking resistance of $0.645 resulting in the dip.

2) 14dma looks to be heading to form a dead cross with 50dma by the end of the week.

3) OBV is has turned down.

4) 4 consecutive black candle days.

If selling continues, I'm expecting a dead cross to form between the 14dma & 50dma. This has a danger of plunging prices down even further thereby breaking the uptrend channel and compromsing support at $0.61 which could send prices down to the rising 200dma as well as previous resistance at $0.59. As stated, ADX doesn't show any trend forming yet despite the selling continuing as evidenced from the 4 black candle days. This gives hope that there could be a rebound especially since RSI & Stochastics indicate stocks are oversold at the moment. However with OBV turning down, and no upturn from RSI and Stochastics this gives an uncertain picture as to when the rebound might take place, if it takes place.

Shall wait a couple more days for clearer signals before deciding the course of action to take. 

Good luck peeps!

~K

K-Green - In Downward Spiral?

You can tell how high a society is by how much of its garbage is recycled. 
~ Dhiyani Ywahoo

Personally, it's a pretty bleak picture for this counter. From the chart above, Keppel Corp spin-off K-Green Trust seems to be trapped in a downtrend channel. MFI & OBV have been trending lower and making lower highs suggesting more distribution and selling. Furthermore, ADX shows that this selling trend is rather strong, above 30, and looks to be rising. -DI has also turned up and seems likely to rise higher. Lastly, Stochastics look set to cross once more despite being in oversold regions. 

Currently at $1.04, it is lying on a previous support. There's not much of charting history for this counter so it's hard to determine how strong this support is. The immediate support below this is $1.00. If all goes well, the doji formed together may signal a rebound in the coming days. But my opinion is that the rebound is only for the short term and prices may very well eventually make their way down to touch the $1.00 support as long as they stay in their downtrending channel. Needs to break above $1.08 to get out of this.

Uncertain & risky in terms of capital preservation based strictly on share price. However, there is a plus of the current yield being at 7.5% which allows share price to drop to $0.96 before any paper loss is seen. Plus support at $1.00 may prevent share prices from dropping below it. Pretty attractive as an income stock with a strong sponsor, zero gearing and a 10% discount to NAV at $1.15 per share. May get ready to accumulate if you believe in the fundamentals of the trust and if you believe in it not dropping below $0.96. Good luck!

Not vested. Just for practice. If you've any comments, corrections, pls let me know by posting below. =)

~K

Will OSIM Dual Listing Plans Cause Price to Continue Rising?

This art of resting the mind and the power of dismissing from it all care and worry is probably one of the secrets of energy in our great men.

~ Captain J. A. Hadfield

For those of you unfamiliar, OSIM is in the business of creating products designed to increase your well-being. They are known mostly for their massage chairs being the biggest maker of massage chairs in Asia, outside Japan.

The company has been doing constant share buybacks as far back as Dec last year before the recession was declared over. Most notably, the company has made more frequent share buybacks since May this year. These share buybacks have increased shareholder value by increasing its earnings per share (EPS). Do note that this does not mean the company's profits is increasing as profits may remain stagnant despite rise in EPS. OSIM however, has shown strong increase in its earnings announcing an 86% rise in its 3Q earnings y-o-y despite sales being "marginally down" attributed to the conversion of its GNC Australian subsidiary into a franchise outlet.

OSIM has been rather flat since Mar this year despite the buybacks. However, the increase in profitability in the 3Q seemed to serve as the catalist to cause the share price to rise once more. The share price has been in an uptrend since the 3rd week of Oct.

From the chart, we can see the clear uptrend, supported by the 14 day moving average.  However, Stochastics and MACD indicators show that the share has been overbought for a long time now. MFI & OBV indicates strong accumulation with MFI soon to reach the overbought zone too. However, despite being overbought, ADX shows that this trend is still very strong. Even when prices seemed to be dipping on the 30th of Nov, news of their dual listing in Taiwan caused the price to bounce higher once more. (For further readings on OSIM, pls refer to links at the bottom of this post.)

In the near term, stock price should continue trending higher. But with decreasing volume, there may be a correction at hand. Hopefully the rising 14dma will help support it. A break below the 14dma, may see prices dipping to the next support at $1.28.

Not vested. Just charting for practice. If there's any comments or corrections, pls feel free to post below.

Happy Monday everyone  =)

~K

Osim CEO Sim targets brand acquisitions to bolster China sales
Wednesday, 01 September 2010

© 2010 - The Edge Singapore

Osim posts 86% rise in 3Q earnings to $13m
Thursday, 21 October 2010

© 2010 - The Edge Singapore

Osim International up on TDR listing plans
Thursday, 02 December 2010

© 2010 - The Edge Singapore

Weekend Comment Dec 3: Osim goes to Taiwan
Saturday, 04 December 2010

© 2010 - The Edge Singapore

Singpost - Downtrend to continue?

Experience is the name every one gives to their mistakes. 

~ Oscar Wilde

I can't argue with that quote above. I blogged about Singpost a couple of days ago and said that I think it'd trend higher from the indicators (See Singpost Rebounding Strong for that big boo boo of an analysis). Thankfully JW, who runs his Wealth Buch blog and a far more experienced technical investor than moi, pointed out the error of my analysis and pointed out such an obvious downtrend channel, I felt so dumb that I had totally missed it. But thanks again JW for highlighting my mistake.

As you can see from the graph above, after Friday's trading day, JW was proved more than just right but accurate too. I've much to learn still and I hope that any of you who spot any more of my disgusting errors can point them out too.

On the bright side, after some thought on why I failed to realize the obvious, some lessons I've learnt are 1) not to analyze in a rush or when I'm tired, 2) to admit your mistakes early, 3) look at the chart first, indicators second and 4) not to let vested interest blind side me into seeing only what I want to see and not what is really there.

Well from Friday's chart, all indicators have turned downwards too, an indication that it's a strong probability the selling will continue and prices could very well fall below the 200 day moving average, supporting at $1.13.

In the long term however, prices look set to reach the 50 week moving average, which stands at $1.11 and is a rather strong support. Perhaps we would see a bounce at this price. However, falling through this support could see price dip to the next support at $1.07.

You all take care now and have a good week ahead.

~K

18 Lessons in Investing from Watching the 2010 Barclays World Tour Men’s Singles Tennis Finals

I have always considered tennis as a combat in an arena between two gladiators who have their racquets and their courage as their weapons.

~ Yannick Noah

Tennis is an addiction that once it has truly hooked a man will not let him go.

~ Russell Lynes

It's no secret the rivalry between Roger Federer and Rafael Nadal. This has produced some of the best tennis matches in history. (Read more on the Federer-Nadal rivalry)

After hearing much about their legendary Wimbledon meet in 2008 which lasted nearly five hours, I've been kicking myself for not watching it then and reduced to watching the highlights on bad quality videos posted on YouTube. It's a real great waste I hadn't started watching tennis earlier, starting one Grand Slam later from the 2008 US Opens. Talk about a little too late! So after nearly two years of waiting and hoping, I was so excited to finally get to see them have a mini-rematch during the 2010 Barclays ATP World Tour. I only hope they'll play this well during another major championship next year. Beautiful tennis.

Date: 29^th Nov

Roger Federer (Switzerland) vs Rafael Nadal (Spain)

Final score: 6-3, 3-6, 6-1

Watching the tour left me thinking about the spirit and effort they put into honing their craft and resulted in me compiling a list of lessons that investors could learn from them.

Here they are:

1) You may not pick a winner every time but when you do, make it count.

At the end of the match, statistics showed that Federer had a low percentage first serve in at 61%. However of that, 92% earned him a point as the serves were either unreturnable or were hit into the net. In investing in stocks, properties, alternative investments and what not, not every investment will make you money. Some may even go belly up. But the important thing is to aim to make those winners, WINNERS that win the game.

2) Poor service can cost you the game. Slacking off can be dangerous. 

The opening set must have taken its toll on Federer. Or perhaps he got a bit cocky. In the second set, Federer seemed to start out with lower energy and aggression causing him to make multiple errors resulting in poor plays, eventually costing him the set. In investing, it's important not slack off and/or become too cocky about a company or investment. Make sure to monitor your investments. At the minimum, take note of quarterly results and announcement to ensure nothing major has taken place.

3) You may fall trying to get that impossible shot the first time but have faith, you’ll get your chance again. 

In the second set, score 1-4, Nadal returned a ball that hit the net but managed to still end up in Federer's court causing Federer to slip and fall hard onto the floor in his attempt to reach it due to the sudden change in footing. However as luck would have it, Nadal hit an almost exact shot later at score 3-5. This time Federer got to it in time and sent the ball straight back into Nadal's court scoring the point.

4) Sometimes it takes a hard fall to wake you up to play better.

Surprisingly, it was only after the fall that Federer started playing better again. In investing, losing money may provide the impetus for us to learn more about ourselves and how to improve our investing styles and strategies, giving us a chance to analyze where we went wrong and correct the mistake, thereby helping us to preform better in the long run.

5) Even when you’ve been knocked down, getting back up ensures you have a chance of winning again.

Sometimes in life, hard knocks can be taken two ways, you stay beaten down or you get up, dust yourself off and do it again. It's obvious which way is better.

6) Never give up.

Throughout the game, the never say die spirit was obvious in Federer & Nadal. Both players kept going for almost every ball, even when it looked almost impossible to us audience. This resulted in quite a bit of ooohh-ing and ahhh-ing when both these players not only managed to reach these balls in time, but also hit them back into play accurately. The moral of the story? Don't give up. The more you learn from the mistakes you make, the better your chance of attaining success. To give up ensures you'll not reach it, ever.

7) If you know what you’re doing, you can do the impossible and succeed even if no one believes you can.

People who have never done what you intend to do and have no idea how hard you’ve trained and prepared yourself for it are quick to write off the success of your efforts as they're basing it on their capability. Don't be discouraged by them. The opinions that count most are those who have reached the "impossible" you're striving for. Seek their guidance and advice instead. 

8) Commentators are just that, commentators. Take what they say with a pinch of salt. 

This is to add to the previous point. People don't always agree with one another. Two different people may have different opinions on the same thing. Though they may have valid opinions, if you're going to listen to every Tom, Dick and Harry, you're going to end up mighty confused. Learn to filter advice. If you have trouble doing so, seek expert help instead. Get their feedback. Believe in yourself. Then give it your all.

9) Supporters will take you further than you think.

In life, you’ll have supporters and you’ll have jeerers. Concentrate on your supporters. They’ll provide you the extra energy to take you to the next level. The encouragement and support they give is priceless in helping you believe in yourself and make you want to try harder. Ignore the jeerers who are boo-ing. They suck the energy out of you and blur the path for you to go far.

10) Focus on the game. The crowd can distract you, but if you’re focused you can still hit a winner.

It's amazing that despite the din from the crowd, both players played wonderful tennis. Their focus was so strong resulting in their superb performance. In today's day and age with so many commitments eating into our time, focusing our abilities and concentration can be a challenge. However, investing requires this. There'll be noise in the market that can lead to emotional rollercoaster rides and make you want to sell out or buy in but if you're focused on the long term goal, the noise shouldn't matter. 

11) Plan your shots well, then do as you plan.

The long term goal needs planning. Lots of planning. Once you've settled on the goal, fix it and carry it out to its entirety with all you can muster. Don't keep shifting your goals. They'll result in you lowering them when times get challenging resulting in mediocre results when you could have achieved so much more.

12) Learn to congratulate yourself on winners and not beat yourself up over losers.

When you hit a poor shot, release the frustration but don’t lose heart. Chin up and believe the next you hit will be better.

When you hit a good shot, congratulate yourself and believe you’ll continue hitting them. Don't attribute it solely to luck and/or God, instead believe that Lady Luck or God favoured your preparation and rewarded you.

13) Know when chasing after a wild ball is gonna waste energy and stop. Conserving it for the next point may count more. 

Despite all the determination to get every ball, both players were quick to realize the waste of effort to run for a ball that was beyond themselves and was obviously unreturnable. In investing, if you made a mistake in your research or realize that the company or investment you're researching on is a waste of time, admit it and stop chasing it just to make the time you spent on it worthwhile. Cut your losses immediately and stop hoping for a rebound. 

14) Know thyself.

That said, the linking point to the previous is to know who you really are. Know your temperament, your ability to control your emotions, your stress threshold, etc. and then find an investment plan that allows your personality to complement it so that it'll be easier for you to see your investment plans through and allow you to reap maximum gains. Conflicting personality and investment plans could have disastrous results such as losing sleep during volatile periods, and cause you to pull out investments prematurely resulting in mediocre gains or even worst, losses.

15) Learn to play from all angles, it increases your chance of success.

In the third and final set, after falling and losing the second, Federer started varying his game again, producing unexpected plays and strategies which eventually won him the match. As it is in investing, keep learning and try to incorporate the relevant strategies into your plan. This prevents you from stagnating and may even help you achieve success sooner than expected.

16) Psychology is important.  Keep your head when the opponent is panicking

In the third set, it was clear that Nadal was frustrated to the point of letting it affect his game play. This caused him the match. Body language matters a lot in competitions. It changes sure winners into unexpected losers and sure losers into unexpected winners. In turn, knowing your own psychology and being able to read the psychology of the market will help immensely in helping you reap better returns. Also, if you've done your research on the investment proper, keeping a calm head will help you pick up bargains when everyone is selling. This ensures you'll be following the age old mantra of "Buy Low, Sell High".

17) Do what you love. You have a higher chance of being really good at it.

A quote from Federer in his recent interview after his triumph, "I have no plans at all, quitting, stopping - whatever you want to call it." In his book, the Outliers, Malcolm Gladwell writes that all greats had to put in a minimum of 10,000 hours fine tuning their craft to achieve their success. When you love what you do, you'll continue doing it despite the odds, and learning how to better yourself at your passion. In time, you'll reach this magic number of 10,000 hours too.

 18) Sometimes when you think your shot’s out, it just may be the point that wins the Championship. 

At match point, Federer's return barely clipped the line that resulted in a couple of seconds of uncertainty.  He looked like he was about to head back to the base line again when officials ruled in his favour winning him the championship. In investing, an example I can think of is Wilmar & Peter Lim. Peter Lim had thought of writing off his $10 million investment in Wilmar when the company sprung to life turning him into one of the richest men in Singapore. Guess it ain't over till the fat lady sings huh?

Hope you enjoyed this post everyone. Feel free to post your comments.

Cheers,

 ~K

Singpost Rebounding Strong

I get mail; therefore I am. 
~ Scott Adams

Four days ago, Singpost erased all gains falling back to where it was during the Aug-Sept period. However, the last two days showed a strong rebound with price closing above the 14 day moving average today.

The OBV, RSI, Parabolic P&S indicators have all turned up today. Stochastics have advanced higher but have not reached overbought levels while the MACD is giving a strong buy signal as well, both by cutting the signal line as well as by heading back to positive territory. This probably caused a lot of people to buy in today. MFI and the ADX dipped a little though but this doesn't look like it'll cause any fallbacks on the price. Furthermore, the -DI is starting to dip downwards, looking likely to cross the +DI indicating that there could be more buying in store. However, with the ADX hovering around 20, this shows that there isn't a strong uptrend just yet leaving a little room for uncertainty. There should probably be clearer signals tomorrow in this area but you could start nibbling if you've been eyeing this stock. 

Personally I had expected prices to bounce back by early next week. Didn't expect the strong price bounce today. With a yield of 5.3% and not much volatility in price, Singpost is best thought of as an income stock. Do not expect to make mega-bucks on this one but it certainly looks like it will go higher.

~K


Edit: As pointed out by JW, Singpost does look like it's in a downtrend. (Thanks JW! =) Sorry everyone else for the misleading title & analysis. Am still learning.) To break out of the channel, prices must close above $1.19.

CapitaMall REIT in Trouble

All things entail rising and falling timing. You must be able to discern this. ~ Miyamoto Musashi

Since 13th of Oct, CapitaMall has been downtrending. From the chart below, this doesn't look like it's going to change soon. OBV and MFI indicate strong distribution with lower highs being formed. Furthermore the 14day moving average seems to be heading straight for a collision path with the 200day m.a., probably forming a dead cross with it. To add to this, ADX is still rising indicating that the strength of the current trend is extremely strong with black candles marking the way down since the 9th of Nov and isn't giving any indication of letting up despite Stochastics and RSI being in oversold region. RSI has also formed lower highs which bodes negatively for CapitaMall as well.

On the bright side, the past three days have seen price seemingly stabilizing at $1.86 support, in hopes of rebounding upwards. A break below this may see price retreating to the next support at $1.81. To break out of the downtrend, price must head above $1.93. Only then can we expect price to head higher.

Personally, for long term investing and as an income stock, at current price to book ratio of 1.25 and yield of 5%, CapitaMall is unattractive as a buy.

Not vested. 

~K

Heightened risks for Singapore REITs - CIMB    
Thursday, 18 November 2010

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