Master Rider Blog

Interest Rates

August 23rd, 2007 NW Teong

To continue with yesterday’s topic, the US 10-year treasury’s yield went up by 6 basis points to close at 4.65 yesterday. A big relief, albeit temporarily. The rise in this rate means that investors in US are not so panicky now as they are not rushing into the safe haven such as the treasury bills / bonds (please also refer to my yesterday blog on “Big Picture”) as compared to a few days ago.

A moderate rise or stable at this level is good for the markets. Why? As explained before, a sharp drop in this yield indicates that investors are very panicky so that they seek shelter under the safe haven provided by the treasury. Worst still, it affects all normal lending activities, i.e. fellow financial institutions refuse to lend to other financial institutions, funds, corporations etc. The worst case scenario on this is a total loss of confidence so that the whole financial system will collapse. This will of course have a dire impact on the real economy, and this will spread to the whole world. Fortunately, we are not in this condition now and it is quite remote that we ever get there.

On the other hand, a sharp rise in yield also means trouble for the markets. Why? This is the very reason (at least play a big role, as explained in my earlier blog) that triggers sub-prime loan saga.

At this juncture, while I know that there are still lots of undercurrent in the US Sub-prime markets, I am truly glad to share that I have a great chance to build up a major portion of my portfolio in the last few days. I am sure readers who read and took action on my market call on 17 Aug would surely do very well too. If you also started to build your portfolio since 17 Aug, I am not too surprise that your portfolio (with the right selection of stocks) has already given you a 20% absolute returns!

As I also shared with you a few days’ back that this stock, BRC Asia already surged more than 30% since 17 Aug. All these are achieved within a week! I would also like to point out that, readers should not forget the monitoring works that go into this kind of market calls and stock buys. It usually takes weeks if not months of monitoring for me to make a bold call just like the one on 17 Aug 2007. As pointed in my e-book, “The Essence of Stock Investment”, all these require knowledge, skills, experience, a right mind set and of course time to achieve.

While doing this, I am both lazy and hard working at the same time, how? Laziness forces me to automate my system as much as possible. I am glad to say that to-date I have already automated 80% of my system. This is achieved via all the free web sites. In short, I am linking my valuation model with web sites such as Singapore Stock Exchange, Yahoo Finance, Money central, and so on. In fact, I can link to almost any web site that I think will give me good real time data. I am also able to monitor some of the key macro indicators via this system. In addition, I have also built more investing/trading monitoring and alerting spreadsheets from this system. Hardworking means I need to constantly go through all the above-mentioned system to monitor all my key spreadsheets and look for buy and sell alerts!

Knowing that markets are volatile, I always have my Investrade strategy back in my mind. Obviously, investrade strategy is just a small part of this FVT technique that I advocate!

You see, while we should have a view on market or a stock direction, we will never know what level it will reach. There are simply too many factors involved, besides there will always exist overshoots and undershoots. However, while we do not know the ultimate level that the stock will move, we should always know what to do at certain level and under certain condition. Thus, if you find yourself do not know what to do at certain time? It is time to either 1) take a break from the markets, 2) take time off to read up more and enrich oneself on the relevant investment knowledge, 3) seek professional help, 4) all of the above.

Last but not least, with the support of all of you, I always find strength and energy to blog so as to share my investment knowledge and views. Thank you very much! In order to maintain my energy level to blog and to be in line with my principle of sharing with as many people as possible, I would encourage all of you to make comments on my blog and more importantly introduce this web site to as many people as possible. Especially those readers who have benefited from this web site, it is time to share. I guess, in today’s world there are not many people who are willing to share professional view free of charge with the public.

Cheers!

Grasp “The Essence of Stock Investment” and “Master Your Own Destiny”!

Entry Filed under: Macro, Stocks