The fate of the dollar

Below is a recommended video clip that I have not completed watching, so putting here for future reference ....

US pending rate cut

Once again, everyone is looking forward to the coming rate cut to happen on Tuesday (18 March 2008). Last night, the US released a surprising CPI report that there is no change in inflation from the previous reporting. This is absolutely unbelieveable as we all know how the oil bull is charging recently and yet the greenback is tumbling down.

On the same day when US released her CPI report, Euro also made announcement on inflation and it read a 3.3% increment. This positions ECB in a very critical moment to tread between fanning off inflaton by rising interest rate or hurting its member export if Euro dollar is rising due to a upward adjustment of interest rate.

I am now betting on a rate cut by Fed on the coming week and ECB to at least maintain their interest rate, if not to increase it. Hence, I proceeded to go long on EUR/USD pair and hopefully this can net me a little money to buy myself a few cups of coffee.

The Rising Risk of Systemic Financial Meltdown

The Rising Risk of a Systemic Financial Meltdown: The Twelve Steps to Financial Disaster


1.

This is the worst housing recession in US history and there is no sign it will bottom out any time soon. At this point it is clear that US home prices will fall between 20% and 30% from their bubbly peak; that would wipe out between $4 trillion and $6 trillion of household wealth. While the subprime meltdown is likely to cause about 2.2 million foreclosures, a 30% fall in home values would imply that over 10 million households would have negative equity in their homes and would have a big incentive to use "jingle mail" (i.e. default, put the home keys in an envelope and send it to their mortgage bank). Moreover, soon enough a few very large home builders will go bankrupt and join the dozens of other small ones that have already gone bankrupt thus leading to another free fall in home builders' stock prices that have irrationally rallied in the last few weeks in spite of a worsening housing recession.

2.

Losses for the financial system from the subprime disaster are now estimated to be as high as $250 to $300 billion. But the financial losses will not be only in subprime mortgages and the related RMBS and CDOs. They are now spreading to near prime and prime mortgages as the same reckless lending practices in subprime (no down-payment, no verification of income, jobs and assets (i.e. NINJA or LIAR loans), interest rate only, negative amortization, teaser rates, etc.) were occurring across the entire spectrum of mortgages; about 60% of all mortgage origination since 2005 through 2007 had these reckless and toxic features. So this is a generalized mortgage crisis and meltdown, not just a subprime one. And losses among all sorts of mortgages will sharply increase as home prices fall sharply and the economy spins into a serious recession. Goldman Sachs now estimates total mortgage credit losses of about $400 billion; but the eventual figures could be much larger if home prices fall more than 20%. Also, the RMBS and CDO markets for securitization of mortgages - already dead for subprime and frozen for other mortgages - remain in a severe credit crunch, thus reducing further the ability of banks to originate mortgages. The mortgage credit crunch will become even more severe.

Also add to the woes and losses of the financial institutions the meltdown of hundreds of billions of off balance SIVs and conduits; this meltdown and the roll-off of the ABCP market has forced banks to bring back on balance sheet these toxic off balance sheet vehicles adding to the capital and liquidity crunch of the financial institutions and adding to their on balance sheet losses. And because of securitization the securitized toxic waste has been spread from banks to capital markets and their investors in the US and abroad, thus increasing - rather than reducing systemic risk - and making the credit crunch global.

3.

The recession will lead - as it is already doing - to a sharp increase in defaults on other forms of unsecured consumer debt: credit cards, auto loans, student loans. There are dozens of millions of subprime credit cards and subprime auto loans in the US. And again defaults in these consumer debt categories will not be limited to subprime borrowers. So add these losses to the financial losses of banks and of other financial institutions (as also these debts were securitized in ABS products), thus leading to a more severe credit crunch. As the Fed loan officers survey suggest the credit crunch is spreading throughout the mortgage market and from mortgages to consumer credit, and from large banks to smaller banks.

4.

While there is serious uncertainty about the losses that monolines will undertake on their insurance of RMBS, CDO and other toxic ABS products, it is now clear that such losses are much higher than the $10-15 billion rescue package that regulators are trying to patch up. Some monolines are actually borderline insolvent and none of them deserves at this point a AAA rating regardless of how much realistic recapitalization is provided. Any business that required an AAA rating to stay in business is a business that does not deserve such a rating in the first place. The monolines should be downgraded as no private rescue package - short of an unlikely public bailout - is realistic or feasible given the deep losses of the monolines on their insurance of toxic ABS products.

Next, the downgrade of the monolines will lead to another $150 of writedowns on ABS portfolios for financial institutions that have already massive losses. It will also lead to additional losses on their portfolio of muni bonds. The downgrade of the monolines will also lead to large losses - and potential runs - on the money market funds that invested in some of these toxic products. The money market funds that are backed by banks or that bought liquidity protection from banks against the risk of a fall in the NAV may avoid a run but such a rescue will exacerbate the capital and liquidity problems of their underwriters. The monolines' downgrade will then also lead to another sharp drop in US equity markets that are already shaken by the risk of a severe recession and large losses in the financial system.

5.

The commercial real estate loan market will soon enter into a meltdown similar to the subprime one. Lending practices in commercial real estate were as reckless as those in residential real estate. The housing crisis will lead - with a short lag - to a bust in non-residential construction as no one will want to build offices, stores, shopping malls/centers in ghost towns. The CMBX index is already pricing a massive increase in credit spreads for non-residential mortgages/loans. And new origination of commercial real estate mortgages is already semi-frozen today; the commercial real estate mortgage market is already seizing up today.

6.

It is possible that some large regional or even national bank that is very exposed to mortgages, residential and commercial, will go bankrupt. Thus some big banks may join the 200 plus subprime lenders that have gone bankrupt. This, like in the case of Northern Rock, will lead to depositors' panic and concerns about deposit insurance. The Fed will have to reaffirm the implicit doctrine that some banks are too big to be allowed to fail. But these bank bankruptcies will lead to severe fiscal losses of bank bailout and effective nationalization of the affected institutions. Already Countrywide - an institution that was more likely insolvent than illiquid - has been bailed out with public money via a $55 billion loan from the FHLB system, a semi-public system of funding of mortgage lenders. Banks' bankruptcies will add to an already severe credit crunch.

7.

The banks losses on their portfolio of leveraged loans are already large and growing. The ability of financial institutions to syndicate and securitize their leveraged loans - a good chunk of which were issued to finance very risky and reckless LBOs - is now at serious risk. And hundreds of billions of dollars of leveraged loans are now stuck on the balance sheet of financial institutions at values well below par (currently about 90 cents on the dollar but soon much lower). Add to this that many reckless LBOs (as senseless LBOs with debt to earnings ratio of seven or eight had become the norm during the go-go days of the credit bubble) have now been postponed, restructured or cancelled. And add to this problem the fact that some actual large LBOs will end up into bankruptcy as some of these corporations taken private are effectively bankrupt in a recession and given the repricing of risk; convenant-lite and PIK toggles may only postpone - not avoid - such bankruptcies and make them uglier when they do eventually occur. The leveraged loans mess is already leading to a freezing up of the CLO market and to growing losses for financial institutions.

8.

Once a severe recession is underway a massive wave of corporate defaults will take place. In a typical year US corporate default rates are about 3.8% (average for 1971-2007); in 2006 and 2007 this figure was a puny 0.6%. And in a typical US recession such default rates surge above 10%. Also during such distressed periods the RGD - or recovery given default - rates are much lower, thus adding to the total losses from a default. Default rates were very low in the last two years because of a slosh of liquidity, easy credit conditions and very low spreads (with junk bond yields being only 260bps above Treasuries until mid June 2007). But now the repricing of risk has been massive: junk bond spreads close to 700bps, iTraxx and CDX indices pricing massive corporate default rates and the junk bond yield issuance market is now semi-frozen. While on average the US and European corporations are in better shape - in terms of profitability and debt burden - than in 2001 there is a large fat tail of corporations with very low profitability and that have piled up a mass of junk bond debt that will soon come to refinancing at much higher spreads. Corporate default rates will surge during the 2008 recession and peak well above 10% based on recent studies. And once defaults are higher and credit spreads higher massive losses will occur among the credit default swaps (CDS) that provided protection against corporate defaults. Estimates of the losses on a notional value of $50 trillion CDS against a bond base of $5 trillion are varied (from $20 billion to $250 billion with a number closer to the latter figure more likely). Losses on CDS do not represent only a transfer of wealth from those who sold protection to those who bought it. If losses are large some of the counterparties who sold protection - possibly large institutions such as monolines, some hedge funds or a large broker dealer - may go bankrupt leading to even greater systemic risk as those who bought protection may face counterparties who cannot pay.

9.

The "shadow banking system" (as defined by the PIMCO folks) or more precisely the "shadow financial system" (as it is composed by non-bank financial institutions) will soon get into serious trouble. This shadow financial system is composed of financial institutions that - like banks - borrow short and in liquid forms and lend or invest long in more illiquid assets. This system includes: SIVs, conduits, money market funds, monolines, investment banks, hedge funds and other non-bank financial institutions. All these institutions are subject to market risk, credit risk (given their risky investments) and especially liquidity/rollover risk as their short term liquid liabilities can be rolled off easily while their assets are more long term and illiquid. Unlike banks these non-bank financial institutions don't have direct or indirect access to the central bank's lender of last resort support as they are not depository institutions. Thus, in the case of financial distress and/or illiquidity they may go bankrupt because of both insolvency and/or lack of liquidity and inability to roll over or refinance their short term liabilities. Deepening problems in the economy and in the financial markets and poor risk managements will lead some of these institutions to go belly up: a few large hedge funds, a few money market funds, the entire SIV system and, possibly, one or two large and systemically important broker dealers. Dealing with the distress of this shadow financial system will be very problematic as this system - stressed by credit and liquidity problems - cannot be directly rescued by the central banks in the way that banks can.

10.

Stock markets in the US and abroad will start pricing a severe US recession - rather than a mild recession - and a sharp global economic slowdown. The fall in stock markets - after the late January 2008 rally fizzles out - will resume as investors will soon realize that the economic downturn is more severe, that the monolines will not be rescued, that financial losses will mount, and that earnings will sharply drop in a recession not just among financial firms but also non financial ones. A few long equity hedge funds will go belly up in 2008 after the massive losses of many hedge funds in August, November and, again, January 2008. Large margin calls will be triggered for long equity investors and another round of massive equity shorting will take place. Long covering and margin calls will lead to a cascading fall in equity markets in the US and a transmission to global equity markets. US and global equity markets will enter into a persistent bear market as in a typical US recession the S&P500 falls by about 28%.

11.

The worsening credit crunch that is affecting most credit markets and credit derivative markets will lead to a dry-up of liquidity in a variety of financial markets, including otherwise very liquid derivatives markets. Another round of credit crunch in interbank markets will ensue triggered by counterparty risk, lack of trust, liquidity premia and credit risk. A variety of interbank rates - TED spreads, BOR-OIS spreads, BOT - Tbill spreads, interbank-policy rate spreads, swap spreads, VIX and other gauges of investors' risk aversion - will massively widen again. Even the easing of the liquidity crunch after massive central banks' actions in December and January will reverse as credit concerns keep interbank spread wide in spite of further injections of liquidity by central banks.

12

A vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices will ensue leading to a cascading and mounting cycle of losses and further credit contraction. In illiquid market actual market prices are now even lower than the lower fundamental value that they now have given the credit problems in the economy. Market prices include a large illiquidity discount on top of the discount due to the credit and fundamental problems of the underlying assets that are backing the distressed financial assets. Capital losses will lead to margin calls and further reduction of risk taking by a variety of financial institutions that are now forced to mark to market their positions. Such a forced fire sale of assets in illiquid markets will lead to further losses that will further contract credit and trigger further margin calls and disintermediation of credit. The triggering event for the next round of this cascade is the downgrade of the monolines and the ensuing sharp drop in equity markets; both will trigger margin calls and further credit disintermediation.

http://209.157.64.200/focus/f-news/1967520/posts

Commodities

As we know, there are companies whose bottom lines are affected by the cost of commodities and hence, knowing how these commodities move in general can paint a better picture for their future stock performance. I have included at the sidebar some commodities data source for research convenience.

A long break and a new journey

I have been away from, and reluctant to re-enter into the stock markets since the last downturn for two reasons :

1. The market was unclear of direction until the US announced a rate cut
2. Now we are entering into October

I know I missed some opportunities, but I still feel that my decision is correct due to the above two main reasons.

However, it is also because of this, I have chosen to give a try in the Forex Market, which fascinated me so much. I have been testing the water there to find out what is suitable for me and what is not. I shall talk about it more later on, when I have the time to re-organise my thoughts and experience so far.

Lastly, I hope all my friends are doing well in their investments and have been increasing their profits all this while. :)

Reply to deveb2002

Hi, deveb2002, Thanks for visiting my blog. Somehow I am unable to post a reply to you in the chatbox. So I decided to write here ...... :)

With $500, I will think it is much better to invest in stock-related books to acquire the necessary knowledge first, before to attempt to place your first trade. Without the right knowledge, it is too easy to lose even one has $500,000.

Hope you have a great start. Keep in contact of your fruitful journey .... :)

More on Convertible Bonds

Searched and delighted to have found the following Q&A from Shareinvestors :

Questions :

I have a few question on Convertible Notes. Please help answer my queries.

1) During conversion, do Convertible Notes owners need to fork out additional money to convert to ordinary shares or just surrender the notes to become ordinary shares ? (moneyless conversion ?)

2) If convertible notes expired, what happens ? After the notes expired can the notes owner chased after the listed company for the money owned to them ?

3) Can convertible notes owner convert the notes to ordinary shares any time they wish too ? Do the notes owner need to wait until expiry date than can convert to ordinary shares ?

4) What happens if ordinary share price failed to reach conversion price of the convertible notes ? Will something be done by the company to pushed up the share price to the conversion price so as to encourage the convertible notes holder to convert to ordinary shares ?

Do you have any example of pass singapore stocks that have never reach its conversion price of the convertible notes prior to expiry date ?

Do you also have examples of pass SG shares that have managed to reached its conversion price of the convertible notes before expiry date ?

5) In your opinion, what is the expected outcome of the ordinary shares when the convertible notes expiry date draw near ? Assuming the ordinary shares is still below the conversion price of the convertible notes.

6) If all convertibles notes holders convert to ordinary shares. What happen to the equity ? Will the shares lose it's values as there are more shares on the market now ?

I am really lost. please lead me out of the jungle.

Thank you so much

Answers

Convertible Notes/Bonds

A convertible note is one which is convertible into the company's common stock. The conversion option to the note/bond is exerciseable when and if the investor wants to do it. The conversion ratio varies from bond to bond. The terms of conversion are set forth in the indenture. The exact number of shares or the method of determining how many shares the bond is converted into is printed in the indenture.

Many times the indenture will tell you how many shares of stock the bond is convertible into. For instance, the indenture might state the conversion price. The conversion price is the price per share that the company is willing to trade their shares of stock for the bond.

Because convertible notes/bonds have something extra, the right to convert to common stock, that little something extra costs the bond holder. The bond will usually carry a slightly lower interest rate. If the stock price rises, the bond price will also rise.

When a note/bond is converted to common stock, the corporate debt is reduced. What was formerly debt has now been converted to equity. Of course, converting debt (notes/bonds) into stock (equity) has the effect of diluting the equity. The company didn't get any larger with the additional stock. But each stockholder's piece of the pie got smaller.

If the company's stock declines to a price which makes the convertible feature of the bond worthless, as long as the company is solvent, the bond will trade based on its yield - like any other bond. There is a price level to which a note/bond will fall and fall no further as long as the company can pay its interest and the principal upon maturity.

Convertible note / bond

General debt obligation of a corporation which can be exchanged for a set number of common shares of the issuing corporation at a prestated conversion price.

Convertible price

The contractually specified price per share at which a convertible security can be converted into shares of common stock.

Conversion ratio

Relationship that determines how many shares of common stock will be received in exchange for each convertible bond when the conversion takes place. It is determined at the time of issue and is expressed either as a ratio or as a conversion price from which the ratio can be figured by dividing the par value of the convertible by the conversion price.

Conversion premium

The percentage by which the conversion price of a convertible security exceeds the prevailing common stock price at the time the convertible security is issued.

Convertible arbitrage

A practice, usually of buying a convertible bond and shorting a percentage of the equivalent underlying common shares to create a positive cash flow position (with expected returns above the riskless rate) in a static environment and capital appreciation should the convertible's premium expand. This form of investing is far from riskless and requires constant monitoring.

Example One :

US$100m 2% Unsecured Convertible Bonds were issued in 1999 by Keppel Telecommunications & Transportation Ltd, a subsidiary of the Company. The Bonds are convertible into Keppel T&T shares on or before 15 December 2002 at the conversion price of $2.46 per share and at the exchange rate of $1.68 to US$1.00. The Bonds, unless previously redeemed, converted or purchased and cancelled, are redeemable at par on 22 December 2002. The amount outstanding at Group level excludes $21,848,000 held by a subsidiary of the Company.

Example Two :

ST Assembly issued US$175m Convertible Notes due 2007 with a yield to maturity 4.91% and interest rate of 1.75% per annum. The conversion price is at S$3.408per ordinary share at a fixed exchange rate US/S 1.8215.


More Answers

1) Do Convertible Notes owners need to fork out additional money to convert to ordinary shares ?

No, if there is not such a provision specified.

2) If convertible notes expired, what happens ? After the notes expired can the notes owner chased after the listed company for the money owned to them ?

The issuer has to redeem in accordance with the terms. Can chase the company as long as it is solvent.

3) Can convertible notes owner convert the notes to ordinary shares any time they wish too ? Do the notes owner need to wait until expiry date than can convert to ordinary shares ?

In most case can convert the notes to ordinary shares any time, in some case has to be done within a specific period of time set out in the terms.

4) What happens if ordinary share price failed to reach conversion price of the convertible notes ? Will something be done by the company to pushed up the share price to the conversion price so as to encourage the convertible notes holder to convert to ordinary shares ?

Unlikely, it has never been easy to fight with the market, even a major stake holder.

Do you have any example of pass singapore stocks that have never reach its conversion price of the convertible notes prior to expiry date ? Do you also have examples of pass SG shares that have managed to reached its conversion price of the convertible notes before expiry date ?

Too many. In example one we may find from the five year chart that the note was once in the money, but out of the money at the end. Make your guess with example two.

5) In your opinion, what is the expected outcome of the ordinary shares when the convertible notes expiry date draw near ? Assuming the ordinary shares is still below the conversion price of the convertible notes.

Since it has always been a known factor, the effect won't be notable. In nine of ten cases, it would not be wise or legal for the major stake holder to do anything to the market price of the concerned share.

6) If all convertibles notes holders convert to ordinary shares. What happen to the equity? Will the shares lose it's values as there are more shares on the market now ?

When a note/bond is converted to common stock, the corporate debt is reduced. What was formerly debt has now been converted to equity. Of course, converting debt (notes/bonds) into stock (equity) has the effect of diluting the equity. The company didn't get any larger with the additional stock. But each stockholder's piece of the pie got smaller. And it has already been a known factor long before its happening.

With those in the money convertible notes, convertible arbitrage might be possible in certain cases, usually of buying the convertible note and shorting a percentage of the equivalent underlying common shares to create a positive cash flow position.

=====================

An interesting link was found on the same page about toxic convertibles worth a read "

http://webb-site.com/articles/toxicon.htm

A little about Convertible Bonds

Saw this posting from a forumer in the ShareJunction Forum and it was extracted from a Merrill Lynch report :

How do we factor convertible bond in our valuation?

There are two major cost components associated with convertible bonds:

i) fair value gain/losses;

ii) interest expenses.

For fair value gains/losses, we believe they should not influence the valuation of a company as they are non-cash items and do not reflect operating fundamental of the company. We do note that the fair value gain/loss affect reported earnings and consequently the company's ability to pay dividends. Nevertheless, the impact should be minimal as S-shares are normally high growth companies that do not pay out 100% of their earnings as dividends.

Interest expenses are non-cash items so they will not affect a company's DCF valuation. However, we believe they should be considered if the likelihood of bond conversion into equity is low. In this case, EPS should be calculated based on the company's existing share capital (and not the expanded share capital upon conversion). Conversely, the interest expenses should not be considered if we believe conversion is likely. In this case, we should all bonds will be converted into equity and calculate EPS based on the diluted share capital.

Convertible bond has its advantages

The issuance of convertible bonds minimizes immediate earnings dilution (as compared to new share issue) as the bonds are converted at a later date and typically at a conversion price higher than current share price. At the same time, the convertible bonds usually carry lower interest rates (compared to straight debt), which reduces interest and more significantly cash flow burden on the company. The process of convertible bond issue is also typically faster than applying for a bank loan especially for a large amount.

Convertible bond disadvantages

The need to recognize amortized interest expenses and fair value losses could distort bottom-line and economic reality of company and consequently affect market sentiment. The potential share overhang upon conversion could also cap share price performance. Separately, bondholders are not likely to convert if company's results are weak, which would lead to poor share price performance. It may worsen things for the company as it would have to fork out a large sum of cash to redeem the bonds. In addition, some convertible bonds may carry special conditions (e.g. reset clause) that could lead to further earning dilution for existing shareholders.

Convertible bonds are not necessarily to be good or bad

In view of the above, we believe there is no clear answer whether it is good or bad for a company to issue convertible bonds. We could generalize by saying that the bond issue will tend to work in favor for the company as long as its earnings fundamentals remain strong and vice versa. A close examination of the terms and conditions, especially 'toxic' terms like reset clause, would also help ascertain whether the bonds are in favor of the company or the bondholders.

Efficient use of capital is key

We reviewed the stock performance of selected S-shares after they issued convertible bonds. On a short-term basis, we find that share price tends to be depressed. One possible explanation could be due to the fact that bondholders are shorting the stock to hedge their position in the call options. However, this effect is only temporary. On a longer-term basis, we find S-shares that have demonstrated efficient use of capital to grow will continue to have good share price performance.

Adopting new trading strategies

Recently I reviewed my trading records and feel quite satisfied with it. However, I wish to adopt a more active stance in my trading to see if I can achieve an even better result ... or worst .... Of course, I'll still keep my current strategies but trying to add in new tools in my trading ....

To be continued ..... :)

Singapore Airlines results up sharply, boosted by one-off gains

Singapore Airlines (SIA), one of the region's top carriers, has said its three months to December net profit jumped 48.6 percent on the back of record revenues and one-off gains from the sale of a leasing business.

High fuel costs continued a heavy burden but recent price pressure had moderated, helping the bottom line, while the airline cautioned that delays in delivery of the Airbus A380 superjumbo would pressure capacity.

Net profit came in at 589.2 million dollars (385 million US) on record revenue of 3.79 billion dollars, up 6.7 percent from a year earlier, it said.

For the nine months to December, net profit totalled 1.46 billion dollars, up 49.6 percent, with revenues at 10.82 billion dollars, up 8.8 percent.

SIA said earnings for the third quarter included a gain of 198 million dollars from the sale of the airline's 35.5 percent stake in Singapore Aircraft Leasing Enterprise to the Bank of China last year.

Without the one-time gain, third quarter net profit was down 1.36 percent from the 396.6 million dollar net profit in the same period last year.

While the rise in fuel costs moderated to 3.8 percent after crude oil prices moderated from record peaks, "it remained high and accounted for 36.7 percent of total expenditure," SIA said Friday.

"Although the price of crude has come down, jet fuel prices have not fallen to the same extent."

The airline, one of the world's most profitable carriers, said strong passenger numbers boosted revenue.

"Demand for air travel grew on the back of benign conditions in the major economies," SIA said.

The airline carried 4.79 million passengers for the quarter, up 9.9 percent over the year before, with the load factor -- the proportion of seats filled -- rising 4.1 percentage points to 80.7 percent.

Cargo load factor fell 3.5 points to 63.1 percent but subsidiary SIA Cargo achieved an operating profit of 52 million dollars for the quarter, reversing an operating loss of 29 million in the first half of its financial year.

The airline painted an upbeat outlook but said jet fuel costs and a shortfall in capacity growth due to delay in the delivery of the Airbus A380 superjumbo were expected to weigh on revenue.

"Advance bookings reflect continued strength in demand for air travel.


"However, revenue growth will be constrained by the shortfall in capacity from the Airbus A380 delays ... On the cost side, the price of jet fuel has moderated of late but it remains historically high."

SIA is set to be the first carrier to get the A380 in October 2007 after a series of delays blamed on wiring problems that delayed the delivery of the aircraft.

SIA shares fell 0.30 dollars to 17.40 dollars ahead of the results announcement made after the stock market closed.

======================================

Comments :

It looks like SIA is facing much pressure from the high fuel price. Consider now the oil price has increased again, this pressure will likely be amounting more than before. Additionally, with the stronger economy condition they mentioned, they still make a loss (after deducting the one-off gain), thus the outlook may not be as bright as we may think. Probably it's time to take a shorting side of its stocks. :)

How to spot the "invisible hand" in stock markets?

This is a post by Dennis and I think it's worth to share with everyone here :)

======================================================
Dennis :

As some people might know, I regard 2 persons who posted at Shareinvestor.com as my sifus. ie. Warren and Mossie.

(Please note that they might not acknowledge me as their student though).

I've learned alot from them during the years 1999 to 2002 when we were all active in the forum discussion of shareinvestor.com. I shared about my knowledge and experience in Personal Finance while I learned from them about stock investing.

Both Mossie and Warren (whom Mossie regards as his sifu) have elaborated at length the concept of "invisible hands" in stock market. Here's their posting on the topic of "invisible hands in the stock market" for the benefit of the general public who might have never had the chance to learn from them untill now:

Cheers!

Dennis Ng

=====================================================

Postings by Mossie first, followed by posting by Warren therafter :
*********************************************************************

A bit of introduction.

In my previous postings, I have often referred to the work of "the invisible hand". It's important to understand who they are; their thinking which prompts them to buy when others are selling; and their motivation.

Their buying action is often revealed in charts, displayed in such formations that are collectively called bottoming out or reversal patterns. Some if these individual formations are called Inverse Head and Shoulders, Cup and Saucers, Double Bottoms or "w" shape, extended bottoms or "u" shape, falling wedges etc.

If you are not certain what they mean, I have linked to a glossary of technical terms http://www.asiachart.com/glossary.html. If you want fuller explanations, there are many good books around.

Why do prices gradually stop falling? Invariably, when the market has fallen a great deal, the stock becomes attractive to the "invisible hand". They are people who can see tomorrow's values TODAY!

They step in to buy and absorb the selling and hence, arrest the fall of the share price. Over time (six months or more), their buying action creates bottoming out formations that I have mentioned above.

Who are they? They are insiders, deal makers, fund managers; people who can see VALUE in the down and out company that nobody else can.

Collectively, I also call such people SMART MONEY (as opposed to dumb money). They are legions of deal makers who have made their piles and now become players. They fund projects. They know balance sheets and they know how to restructure businesses. They know how to restructure debt, create holding companies to place their debt etc.

They are the brains behind every operation. They employ lawyers,stock-brokers, bankers, accountants to do their legwork and due diligence
before any action is taken.

Now that the introduction to the "invisble hand" is done, I will begin my segment to "stalking the prey" using some life examples like Pertama.

Do look out for them.

Continuing my thread, in order for the "invisible hand" to stalk his prey (stock), the stalker (buyer) has to think like the prey(the stock).

Before I begin proper, all I am doing is share some thoughts of the stalker. But please, I don't claim to know the answers and I value all of your contributions.

In this instance, I am stalking Pertama. To think like the prey, it's important to understand J Harvey, the business-man. What makes him tick? Isn't he aware of the risks? Isn't he aware that S'pore is renowned for high rents? What is he going to do to preserve margins?

Isn't he aware K mart failed in the past? Isn't he aware that there is competiton in Courts, Safe, Pennslyvania House, IKEA etc etc? How does he intend to create his own comparative advantage against the others.

How what he do to survive against stiff competition in Australia? Was it by pricing competitively, or raising service levels, or a combination of both? What did he do to compound 30% in his share price over six years?

What MARGIN of SAFETY do I the stalker have, if I catch my prey and realise that it's not exactly what I caught (that is, got it wrong). Is there intrinsic value in the prey? Is the cash of $27million sufficient as a buffer? What does George Goh of Ossia know?? He is, after all, a FELLOW STALKER!

I am not disputing your concerns on Pertama. But I feel that if I can answer those questions and put myself in Jerry Harvey's shoes, I know what are the pitfalls and, therefore, prepared to ride out the business risks with him.
You see, the stalker may be monitoring SI and all our postings.After all, SI is becoming one of the main financial portals. It is all part of the stalker's game to drive up the share price, entice ALL THE SHORT TERM PLAYERS INTO THE FRAY AND then DUMP the shares to you.

Please remember prices condition people's minds. If a stock price goes SOUTH, people say "get me out". But if prices go NORTH, everybody, house traders etc will shout "Blood" and go into a feeding frenzy.

(Remember, most of the time, the stalker spends most of his/her time waiting, studying, seeking information about the prey before he pounces).

Again, I profess not to know much about the retail industry and I value your feedback. Your input have provided gaps in information that I need to bridge with people who are in-the-know.

However, my sources in Australia have told me that HN practices an innovative franchise arrangement that allows staff to share in the profits of a store. Unlike a traditonal franchisee relationship, staff are encourage to enrol as franchisees without the need of coming out with their own capital. This instantly gives the potential franchisee a sense of ownership without capital being a restrictive factor.

In Australia, HN's staff are legendary in their service commitment. Why? Because they NO longer see themselves as staff but as OWNERS of their own businesses.

Next, they are coming with an innovative financing scheme that allows the customer to pay the same price for products regardless of whether the purchase was made by cash or hire purchase.

These innovative schemes have been practised in Australia for years but, I guess, have not been followed in Asia.

Also, my friends in Australia told me that HN's staff practice a motto: do all you can to get the customer back into your shop. What do I mean by that? If you had purchased a phone from vendor A (somebody other than Pertama), and if that phone breaks down, they are prepared to take in that phone for repairs at no cost. How about that for service? Suggest that to Singtel or M1? They will flip!!

My point for sharing is this: competition is everywhere and in every industry. You and I are in business and we know competition is a given. But it takes somebody who thinks totally "out of the box" to rock the very foundations of that industry. The person who keeps questioning the assumptions and is an out-of-box thinker constantly innovates and keeps the customer coming back into the shop.

Jerry Harvey is one such visionary who I feel comfortable to bet on. He has the track record to back it up.

Frankly, I am looking forward to their arrival because I am quite tired of the poor service quality that I have been receiving. Service level in S'pore needs to raised. One way of raising service level is to make employees feel like owners through options, franchise arrangements that do not require them to come up with capital etc.

Since I am on this topic, let me cite another example. Today, I went to Funan looking for some software. The chap who served gave me smiles and took pains to answer all my questions. I thought that was great. But the moment the sale was made and he left me to the cashier, the cashier's rudness undid all the good impressions created. My guess is that the salesperson is incented by commissions but the cashier wasn't. And it really showed.


Next posting, I will share what I have discovered about Pertama from my stalking activities. Grrrrr!

In this posting, I will be introducing another strategy that is the favourite of "the Invisible Hand".

This strategy can best be described as using "Other People's Money" or OPM. OPM is centred around the principle of LEVERAGE, making your money work hardest for you, doing more with less, getting more returns from $1 of capital.

If you are in business, you will be familiar with leverage. The most successful businessman use OPM and, I daresay, your success or failure as a businessman would depend on whether you mastered the art of using OPM. The most basic form is borrowing from banks for capital to start a business, mortage to buy a house etc. Seldom do you buy a house with 100% of your capital. To get the "maximum" return possible, you use a combination of your own capital and other people's money (in this case, bank debt).

The more advanced form of using OPM is practised in the stock market. How is this so, you may ask?

Well,when you list your company, you add another currency. That currency is the stock price. Having a company listed and having that new currency (stock price) is equivalent to adding another weapon to the stalker's arsernal to negotiate deals, issue derivatives (like warrants), serve as collateral to banks for addtional debt and so on. Also, having a public listing allows a stalker to "borrow" from the public by issuing rights issues to the public, enticing them with warrants and other freebies.

What I have stated above is nothing new to most of us. What I have done is encapsulated the principal of leverage. However, understanding how the stalker uses OPM (leverage) in the stock-market will, hopefully, prevent you from falling into one of the stalker's schemes.

This is one of the hardest concepts to explain in a forum such as this. So please ask me to explain any concepts that are unclear. I look forward to learning from one another.
Yes, we need constant reminding of the workings of the "invisible hands".

Remember, money is always made on the way down. "Invisible hands' are not charitable organisations. They will not buy and chase prices up. Why? Because that will only benfit every one else. They BUY only when prices fall. Why? They are buying somebody else's losses (or cut losses).

"Invisible hands" understand the psychological effect of what prices do to people. They know that prices condition people's minds. They know when punters are disinterested when prices fall and how punters will chase and get all excited when prices move up. They know how to use this info to amke $$ for themselves.

I make no apologies for repeating this message again and again. Forumers must be made aware how the Mr Market robs those who was disinformed!!


A monumental posting on the IH written by sifu Warren. Reproducing here for archival purpose. ***********************************************************************

Price & Volume studies

Elle,

I thought I'd add my 2.5c worth of how I use price and volume studies to detact the action of IH. I use the charting system by Bridge Information Services where they have many different programmes that allow the manipulation of data to show whatever configuration I might want. Be it intra-day charts for 1 day to 21 days, daily charts with price feeds for one year, weekly charts for price feeds over 5 years and monthly charts for upto 12 years, or howsoever much data there exists for that particular stock. All these price data is accompanied by volume figures which get charted at the bottom. They also have the ability to chart volumes (and this one I like the best of all) , along various price bands that gets displayed on the lefthand side of the chart.

Armed with that capability, I go hunting in the market, hoping to stalk the path taken by IH.

My reckoning is if IH is active at a particular stock, his presence will be felt by the amount of volume that changes hands along a price band. You see, whenever collection/distribution takes place, it is done based on price, not time. If one decides to collect millions of shares one will naturally do it in within specified price limits, and continue to do so (of course taking market sentiment into account) irregardless of time taken. Now, for the collection campaign to be successful, there must be enough volume passing through within those price limits. Not enough and the campaign maybe just a minor exercise. Plenty of volume changing hands and the campaign is usually a prelude to some future price assault.

What I'm looking for in the chart is to find price congestion bands where large volumes have changed hands. Now if the price bands are near the top of the chart and volumes are high, you can bet that active DISTRIBUTION is taking place.

Naturally, for that to have occurred, some previous collection must have taken place some time back. The result will be market peaks which could take the form of head-and-shoulder, double tops, triangles etc, collectively known as rounding tops. After sufficient stock has passed from strong to weak hands, price breakdowns occur, and the sheer weight of all that stock passed at the highs will cause prices to weaken once the bear market begins.

The converse is ACCUMULATION. Look for price congestion bands near the bottom of chart and where prices, after a long and deep plunge, begin levelling off and seem to meander along a somewhat sideways pattern. The price ranges are tighter and volumes, while not especially high, are significant. There will even be occassions when the chart 'breaks' and prices drop down to new lows for a while, but only to come back within the observed price congestions. The result will be market bottoms which could take the form of head-and-shoulder, double bottoms, rectangles etc, collectively known as rounding bottoms. After sufficient stock has passed from weak to strong hands, price breakouts or bull flurries occur as IH triggers the start of a new uptrend. With sufficient stock firmly tucked away in firm hands, the upside thrusts (initially on high volumes), will continue as IH walks the stock to whatever level desired.

So large volume at the highs means distribution, while large volumes at the lows signify collection. That simple? Not really. There are many other tricks they employ (Carol had highlighted some of these in this thread earlier on) to throw the scent off and hide their tracks. What I use then is the weekly and monthly price/volume tables to determine their actions. Bear in mind that action is being taken around price limits, so you can spot that clearly when the price ranges start getting narrower and narrower such that the
price range between highs and lows on the monthly table tighten. I look for a clear stretch of time when this occur and add up the volume figures, and if these add up to significant %age of the total issued capital of the stock, I start getting excited. For I know that the IH had been active, and I better be on guard for a new (and unexpected) trend will emerge.

Naturally, if congestion price ranges were near the lows and large volumes had changed hands, the next trend will be upwards. I investigate more of the stock, conducting other TA studies like MACDs, RSI, Stochastics to determine if the timing is ripe for the planned move. What usually is the missing piece from this jigsaw puzzle is the TRIGGER. That is where, with the benefit of FA and an active imagination I set about scenario planning likely outcomes. I map out what sort of corporate actions would set up the stock for a market re-rating. Oddly enough, these usually produce outcomes that eventually become the subject of market rumours. Once done, I plan my entry into the stock and await the IH to show his hand.

Folks, there you have it, my personal method to track and spot winners and losers in the market. I hope it could be of use to you, for it has worked well for me. Thanks for the patience in reading this posting.

Warren.

Welcome October in the haze

Wow, I haven't been doing some blogging since some time back due to personal commitments. However, I hope my friends here all are doing great both in personal life and in the financial advancement ... :)

Well, October has a quite strong start with bullishness still in the World Markets. However, there are already some bear calls from those who think that the indices have gone too high. Will the market haze set in just like the real haze that invaded a few days ago ? Let's tune in for more to come ... ;)

PS : Anyway, I have decided to abandon Eilliot Wave Theory as it is too complex for my simple understanding ... :P

Wave C sweeping across

Looks like another strong wave is coming ..

Be extra careful ...

No cause for a pause
Fed may find future reports failing to justify stop in rate hikes

I happened to read this week's Weekend Today (page 16) and it posted a piece of news that read :

Federal Reserve chairman Ben Bernanke and his colleagues at the central bank, who on Thursaday scaled back their bias toward more interest-rate increases, may find that new economic numbers still fail to justify a pause.

In raising the benchmark rate to 5.25 per cent - the 17th straight increase - the Fed said an additional move "may be needed" only if new statistics warrant it. Aftr the previous four meetings, the Fed said that further increases were probably required anyway.

By the time policy makers gather again in August, they will have received three consumer-price reports, including one on Friday - two reports on job growth and the first reading of second-quarter gross domestic product.

Investors are still putting their money on a tightening at one of the next two meetings and see an increase at the next session as mor likely than not.

"They feel they're largely on top of this inflation pickup," Bear Stearns Cos chief US economist John Ryding, who is a former Fed economists, said of the central bank. "I'm not so sure they are."

The Fed's statement after its two-day meeting in Washington said that the slowdown in economic growth since the start of the year "should help to limit inflation pressures over time", even after "elevated" measures of price increases for goods other than food and energy in recent months.

The core consumer-price index measure, released by the Labor Department this month, rose at an annual rate of 3.8 percent over the last three months, the most since March 1995.

"Growth is likely to slow sometime soon, and yet inflation is picking up," said Mr Stephen Stanley, managing director and chief economist at RBS Greenwich Captial Markts. "They are much more likely to respond to inflation."

On Thursday the Fed said "the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as impled by incoming information.

Speculation on the rate hike moves

Recently, a lot of market opinions have been made whether the stock market will "cheong" on Fed's decision. Some speculate that if the rate hike is within the market expectation, the bad news is factored in and so the market can continue to rise; if the rate hike is more than expected, the market will turn sour and the market will also "cheong" but on the downside ...

Personally, I think these opinions are quite reasonable. However, we also must not forget that a high interest rate in a long run hurts businesses such that the cost of doing business is more expensive, hence it will dampen the profits make by companies. This in turn hurts the stock market performance in the long run.

In view of the above, I will not particularly be cheering over Fed's decision if the rising of interest rate is within the market expectation.

Wave B setting its feet into the Market

It's been about two weeks after I posted about the "Wave A In Action" which I noted the downward thrust continued its course. However, last night, the DOW reversed this action and gained +110 points along with Nasdaq and S&P 500 turning green.

Tonight, the US Market continues its happy mood climbing higher and higher, clinging at around the +100 points mark as of now (11.30 pm, Thursday). If by the end of the trading day, the Index keeps at a relatively high level, we shall see some positive effect on the Singapore Stock Market. If the Dow, Nasdaq and S&P 500 continues to deliver more green than red in the coming days, this probably will give the local market a boost. Then, I think Wave B is in action.

However, just how long will this Wave B (if it does happen) be here will largely depend on how much the Interest Rates may be raised, and if the oil price would resume its upward trend.

For the time being, let's enjoy the bullish fruit while it lasts. :)

Will Fed raise the Interest Rates ?

I think the chance of raising the interest rate is high, if not, why is there so much hawkish slip-of-the-mouth news before the actual annoucement ?

Let me be straight forward upfront, I did not study Economy nor do I have much knowledge of it. However, let's face the truth and use some common layman thinking together.

If the oil price keeps shooting up rapidly (which may due to un-rest in the Middle East, escalating high oil consumption in most countries, etc), how can it not make the cost of doing business going up ? Eventually, the cost is passed on to the end consumers - thus, price of goods will rise rapidly as well. When this happens, a $100 that can buy, say, 10 items before, will result later with the same $100 that may enable one to buy the same items but 7 of them only. Thus inflation occurs. The traditional way to fight inflation by Fed is to raise the intereste rate to control the inflation. In view of the above, what do you think the chances and possibilities are ? ;)

Wave B in the making ?

I predicted on Thursday in the CANSLIM Forum that Friday would be a Red day. However, it didn't come true but it instead closed positively with a 40+ points gain. So you see, a prediction is still just a prediction, the market will always be right. I'll keep that in mind. ;)

Although the STI closed with a positive note on Friday, but my take now is still on the bearish side over a longer term which I indicated earlier that Wave A is still in the action and continues to unfold.

However, with the STI turns up on Friday, it may signal the end of Wave A and indicates a Wave B in the making. But we'll need more days of positive closing before this suspicion can be concluded, one day of reversal is not enough to tell the story. Anyway. in the event that this turns out to be true, we'll probably see some techical rebounds on the upside before the downward thrust resumes (Wave C) ....

Elliot Waves - Wave A still in action

It's been exactly a week since my last Wednesday posting. Unfortunately, it looks like my scribbling of the Wave Theory happens to be correct for the moment ...

On Monday Night (US Monday Day), the market had shot down to a close to 200 points again (-200 pts) and worst, tonight it opened sharply down to a negative 100+ points .. whether or not it may close with another massive drop is yet to be seen and the result will be out in a few hours time ...

With such a gloomy outlook as of now, I think we can expect local market to follow suite .. let me grab and tighten my seat belt for another roller coaster ride tomorrow ...

Elliot Waves - Wave A in action

Last night, I took a look at the chart on STI and out of fun, I drawn the 1,2,3,4,5,A,B,C waves (the 5-3 pattern). After drawing it, I find that we are in the A Correction Wave and it seems that it has no sign of reversing yet. With last night DOW dratiscal drop of almost 200 points (-184.18), I think the Wave A may continue its course heading down today. Let's hope it won't happen.

By the way, I'm a new student of Elliot Waves, so my analysis on the Wave for STI may need adjustment in the future. But it's my try to apply this theory to learn something new. hehe ...

Where will STI likely makes a U-Turn ?

The STI index reached its peak on the 3rd May 2006 and closed at around 2659, after which it tried to break through that mark but failed, it then closed at around 2657 on 8th May 2006. Ever since then, it plunged downwards without looking back, only with a small interruption - a small rebound (some gave it a nice name - a dead cat bounce) that happened on 17th May 2006. It closed at around 2548. On 18th May 2006, the free fall resumed and dropped freely till yesterday, 22nd May 2006 and closed at around 2416.

The interesting question that quirls in all investors mind is that : when will this plunge stops ?

I'm pondering this question too and after taking a look at the chart, I think there is a small chance that the market to rebound slightly tomorrow (23rd May 2006, Tuesday). If this happens, my take for those who are in red now to cut loss, provided you don't intend to keep it for long term.

However, judging the overnight performance of the major indices around the world, this hope for rebound seems to be quite a luxury one. When the STI does not take a break of its downward thrust, we will likely to see it fall till the next possible level at around 2380 to 2360 level before it rebounces strongly.

Let's put our palms together and pray for the sicken market to recover soon .....

He makes BIG MONEY in shares, not soccer

LAST WORLD CUP: Civil servant turns down friends' offer to bet on matches, instead he buys shares
Now: They've gone broke, but he's worth $800,000. His salary? Just $3,000 a month
By Joyce Lim
May 08, 2006

MR Roger Koh aims to become a millionaire in less than 10 years. And it is not just a pipe dream for the 33-year-old civil servant, even though he draws a monthly salary of just $3,000. In fact, he's just $200,000 shy of it. Like some Singaporeans, Mr Koh has $500,000 in CPF, insurance and housing.

But unlike many Singaporeans, he has $300,000 in cash and shares. His four-room HDB flat in the west and Japanese saloon car have also been fully paid for. This brings Mr Koh's total assets to $800,000.

Showing his latest bank and CPF statements to The New Paper on Sunday, Mr Koh proudly declares that he is debt-free.

And in a country where Singaporeans are quick to swipe and sign, Mr Koh is a rare breed.
He claims he has never owned a credit card.

Indeed, Mr Koh, married with a 1-year-old son, hates spending on credit and prefers to pay with cash or by Nets.

But he might not have the comfortable life he's leading now if he had gambled on the World Cup four years ago.

He contacted us after reading our report about a man who became a bankrupt after he gambled away all his money on World Cup matches.

The story struck a chord with Mr Koh as he too had once come close to losing his life savings on soccer bets.

He recalled: 'My friends and colleagues asked me to chip in on their bets. They told me, 'Sure win'.

'But I didn't believe them because they were soccer fanatics, and every match to them was a sure win. 'I'll place my money only on something I know well. Though I like playing soccer, I don't really follow soccer news or watch the matches.'

So Mr Koh watched from the sidelines as his friends placed huge bets.
'When I told my friends, 'No, thanks', some of them made fun of me and called me kiasu and kiasi (afraid to lose and die in Hokkien),' he said.

'When they won, they would say to me, 'See, told you to buy, but you didn't want'.'

STOOD HIS GROUND

Many times, he was tempted to take the plunge, but each time he said he stood his ground.
Instead, he put his money in shares, even though the stock market was languishing then.
'My friends, who won in the soccer matches, laughed at me for putting my money in stocks. They said that the market will keep going down. But I thought otherwise,' said Mr Koh, who holds a local diploma in business studies.

'I recalled how there was a rebound in the stock market after the 9/11 incident. So I decided to take the chance and invested all my money then.'
'I spent my time reading up on financial news and wrote e-mails to company CEOs to ask about their financial reports.'

With a capital of $30,000 in his CPF account and $50,000 cash, Mr Koh first invested in unit trusts and stocks. Withing a year, he made $100,000.

His current portfolio includes shares in HTL International, Unisteel, BestWorld and TPV.
In four years, his investment portfolio increased by more than 160 per cent.

His friends, on the other hand, landed themselves deep in debt - many of them got burnt by gambling on the World Cup. Mr Koh said: 'They lost their promotions, advancements, and most importantly, their loved ones, as the debt was too much for them to handle.
'Some of them tried to borrow money from me. But I refused because I didn't think it would do them any good.

FRIEND DECLARE BANKRUPT

'One of them, a property agent, was more than $50,000 in debt and finally had to declare himself a bankrupt.' Another colleague's career was affected when his boss found out about his gambling from debtors who visited him at the office.'

Looking back, Mr Koh said he was glad he stayed away from football betting. 'Now, I aim to help my friends or relatives in their investment portfolio. 'I don't just concentrate on making money. I also want to give back to society by donating blood 100 times before I reach 50. I have since donated blood 42 times.'

And since the World Cup is just round the corner, Mr Koh has pasted The New Paper on Sunday report at his work desk to remind his colleagues about the pitfalls of soccer betting.

'I'm glad your paper ran the report. I hope it can serve as a reminder to readers not to blindly place their money on something they don't know about.'

Odds are stock market will be hit

FORGET about the stock market.

Come June, punters will be watching the likes of Ronaldinho, David Beckham and Roberto Carlos make their runs down the soccer field rather than the rise and fall of the Nikkei, Dow Jones and Hang Seng indices.

With Berlin 2006 kicking off in just over a month, punters are more likely to be putting their money on the World Cup.

Some analysts believe that many retail investors and contra players, who look for short-term gains in shares, will shift their resources to football betting.

Remisier James Quek, 30, feels that the World Cup will ease share-trading activities.
'There will probably be less speculative trading,' he said. 'Even though share trading and soccer betting are two different things, the latter is still an opportunity to make money.'

HYPE

With less liquidity, share prices are set to fall.

'Some people may just take advantage of the situation and come in during the World Cup period,' said Mr Quek.

There are bound to be some brokers who will be distracted by the World Cup and their work attitude will be affected.

'Maybe there'll be a lot of hype in the first few matches. The middle part will be quieter until the finals,' said Mr Quek.

During the last World Cup in 2002, turnover on the SGX was almost halved in June, compared to the previous month. Share prices also took a hit. However, a veteran remisier, who declined to be named, feels that today's market cannot be compared to four years ago. She said: 'There was the crisis back then. Our economy has since recovered and we've recently been seeing a high volume of China stocks here.

'Also, with the General Elections, the market will do well,' she said.

Share investor Andy Ang, 28, agreed. 'In fact, people are speculating that the STI will go up even more,' the engineer said. He is looking forward to the World Cup's kick-off on 9 Jun, but said he will not neglect his stock market activities.

Most of the investors we spoke to also said they would not be dumping their money into football preferring shares.

Though share speculation is also a form of gambling, it is still safer than soccer betting as losses can be reversed if the share price recovers.

Share investor Andy Ang said although he is looking forward to the World Cup's kick-off on 9 Jun, he will not neglect his stock market activities.

Engineer Ray Tan, 30, is also not bothered by the World Cup. 'I don't give a damn about the World Cup. Not everyone is into soccer,' he said. 'Some investors will probably be watching soccer matches and be less focused on the stock market. 'In that case, fewer stocks will be traded, which could result in depreciating share prices.'

This means the World Cup may actually be a good time for investors to go bargain hunting.

Source : http://newpaper.asia1.com.sg/news/story/0,4136,106255-1147125540,00.html?

Blog Mission

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Good day to all who happen to pass by this blog ...

The purpose of starting this blog is to allow myself to pen down any thoughts or research of a stock that I have interest in (it can be based on solely on FA, TA or FATA), but not necessarily will buy or sell them.

Also, I hope this blog will help myself to improve my investment and trading skills, preferably will also increase my wealth along the way too. ;)

Hope those who read this blog will have a nice time here ....

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