Posts filed under 'Commodities'
Nasdaq and STI index (see charts below) have both surged between 8% to 10% since the recent low registered on 17 March. A very decent gain in slightly more than two weeks’ time, or about 200% gain in annualized term. This is impressive under a bearish backdrop. For those who have attended my Investment Seminar on 22 Oct or have read my last blog on 25 March, I hope you have made some good profits.
However, I must warn all investors that the down-trend of the markets (be it Nasdaq or STI index) has not been broken. In short, as far as charts are concern, the down-trend is still intact! As I mentioned in my last blog, market would still be volatile in the next few months (please refer to point 5 in previous blog) and I urge investors to invest with great caution, especially in the next few weeks!
Even on the macro picture, this calls for more monitoring and careful analysis and of course utmost prudence in investments. Yes, the macro picture is likely to deteriorate, and this is going to continue to reflect in the employment data, then in the revenue and P&L of the corporate (especially in US). The only positive out of US, perhaps is the likelihood of both positive fiscal and monetary policy. We shall continue to see interest rates falling, albeit at a smaller drop, we shall continue to see more jobless numbers….. All these would be played out in the next few months. Things would be clearer (hopefully) by end of third quarter of this year.
While Asia is more immune to US sub-prime loan saga, Asia economies are not totally immune to slow down in US economies. As I said many times before, it is not a matter of Asia economies de-coupling from US or not (don’t ever waste time argue on this!). Common sense would tell you that the impact from US on Asia is diminishing, however, US economy still exerts considerable impact on Asia economies. It is like you are being shifted further from the epic center and whether you get impacted or not really depend on the degree of the earth quake. Hence, if US has a big economy earth quake (like current situation), we in Asia would surely feel the impact. Of course, if US is only catching a minor cold, then we are alright. Despite the big earth quake in US, Asia economies are still expecting some decent economic growth. However, we should know that investors never like slow growth, especially one that comes from a higher growth before. Remember what I said about earnings and multiple expansions during high growth period? We have to watch out on earnings and multiple contractions during the small or no growth period.
In summary, I urge investors to exercise great caution in the next few weeks! Oh yes, on commodities, I have urged investors to be caution in my previous blog. I am cautious on my short-term (three-six) view on commodities, but remain bullish on my long-term view. By the way, I have just come back from Japan last week, the cherry blossom and Ryokan onsen at Hakone are superb. Please visit Japan on the 1st week of April, it is simply marvellous! Cheers!
Note: From the overwhelming queries on my e-publication that I received, I wish to use this opportunity to say that while the samples used in the e-materials might be from certain market, the theory, framework, valuation model, portfolio spreadsheets, investment / trading /investrade strategies and so on are applicable in almost all stock markets in the world. Hence, whether you are from China, India, England, Singapore and so on, these investment educational materials on stocks and options shall be useful to you. As always, please do read the disclaimer too! One more point to share is that, the e-seminar on US Options is getting very popular. In fact, more buy orders are coming for this e-material. The choice is really obvious if you compare this e-seminar on US options to those that are available (through creative advertisement) via live seminars!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
April 9th, 2008
NW Teong
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Continue Reading January 6th, 2008
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I first posted my blog “A Tale of Two Markets” on 16 Oct 2007. When I read it again 10 minutes ago, it is still very relevant. In fact we have seen the events being played out in these two markets, namely those in US vis-à-vis Asia markets. While on one hand you hear lots of concern on the housing problem in US expressed by big names such as Soros, Bill Gross, Alan Greenspan and so on in the past few days, and on the other hand Asia markets continue the bull run best represented by the IPO of hot internet stock, Alibaba.com which was listed in Hong Kong Stock Exchange yesterday. Alibaba.com ‘s share price closed at almost three times its IPO price at the close of its first trading day. Before this news, we have also heard the news of PetroChina becomes the first US trillion dollars company in the whole wide world after it has listed its shares in Shanghai Stock Exchange few days ago. I can only use the word “crazy” to describe the euphoria in both China and Hong Kong markets and to certain extend other markets in Asia too.
Most of the things that I talked about in my previous blogs are being played out now: US$ is weakening, commodity prices have surged and are still surging, crude oil is breaking new record high, same go for gold price, more bad news in US subprime loans, liquidity driven bull run in Asia markets will continue, tech stocks are doing well in US (be more selective) and also present value buy in some Asia markets. Please also read my comment yesterday posted under the blog “A Quick Glance”. So far so good, as I mentioned before, all these will go on until some triggering events occur. For instance, a big blow up of the subprime loan problem in US, crude oil shoots pass US$120 per barrel in a short time, policy risk (US, China and others) or simply an event risk such as a terrorist attack.
In fact, as argued before, US is in an awkward situation, its domestic housing problem has forced Fed to lower interest rates which it would otherwise not willing to do so in view of high commodity price, especially the crude price, potential of higher inflation, weakening of US$ etc. This would expedite the liquidity outflow from US into the emerging markets. It seems like the US markets are asking for more interest rates cut from the Fed. Cut or no cut, this remains to be seen, however, the liquidity bull run in Asia is likely to continue, at least in these two months! Always invest prudently and be very conservative, this is the only way to win big money (and avoid losing money)! For those Master Rider Club members, you would receive a stock recommendation email today. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
November 7th, 2007
NW Teong
Yes, US Fed cut its fed-funds rate by another 25 basis points yesterday. This is largely as expected and it shows that at the end of the day, the Fed can ill afford to take the risk of a potential economy implosion caused partly by the severe slow down in housing sector. In order to address the housing problem as well as to prevent the economy from slipping into recession, the Fed has to bite the bullet. The side effect of course is creating a bull run in other sectors that already enjoying superd growth. As already described in my earlier blogs, we are likely to see new records for emerging stock markets, new level for commodities prices.
Regional currencies will continue to strengthen vis-à-vis the US$. However, this process of strengthening of regional currencies will be more gradual from now onwards as the central bankers would not hesitate to intervene in the currency market to prod up the US$ so as to maintain the competitiveness of their own currencies. One has to note that if your currency is too strong, the products that you produced will be less competitive as compared to products produced by another country with “cheaper” currency with all other factors being constant. In short, every country would want its currency to be very competitive as compared to others. This is also a reason why US, EU and some other countries would want China to let the Chinese RMB or Yuen to appreciate faster and at higher quantum than what it is doing now. This is also a reason why EU has started to make noise of a weak US$ vis-à-vis Euro which is already at historical record now.
Thanks to US Fed, the momentum in the regional stock markets should continue and will enjoy the classical liquidity bull run till end of the years barring unforeseen circumstances. Those markets and sectors that are doing well will continue to do well and some of these will continue to see new records. Yes, this includes the gravity-defying markets such as China and India. After recent consolidation, China market is likely to continue its super bull run. I reckon this bull run may stop months before the Olympic start in August 2008.
A quick look at the macro indicators that I monitor (please note that these indicators can be found in The Master Rider System which is linked to various websites to give you live or near live data, you can find this spreadsheet in the website: www.master-rider.com) confirmed what I have described above. In fact, it has confirmed my forecast days if not weeks ago. Holly cow, look at the price of crude oil, it is again at historical high of around US$95.85 per barrel at the moment! It is just a ‘whisker’ away from the US$100 that I talked about days ago. While the Baltic Dry Index has started to correct in the last few days, it is likely to set new record in the days to come, thanks in part to the US interest rates cut.
Besides the usual booming sectors such as oil and gas, shipping and marine and so on, I continue to be bullish in tech sector which is well represented by US Nasdaq index. Please look at the Nasdaq chart below:-
At yesterday closing of 2859, it is the highest level since Jan 2001, i.e. post-internet bubble days. While it still has a long way to go before reaching the historical peak of about 5132 achieved on Mar 2000, it is surely on a uptrend. As for regional tech stocks ex-Japan, the tech stocks in Taiwan and Korea will be the preferred choice followed by Singapore and Malaysia and others. Please note that the tech sector in the region are highly related to the tech sector, especially the tech leaders in the US. Hence, one simple strategy to play regional tech stocks is to follow those stocks that have derived huge sales from the tech leaders in US that are doing exceptionally well at the moment. Those tech leaders in US that are doing exceptionally well currently include Intel, Apple, Google, Microsoft, and so on. The semicon related stocks are still not performing well at the moment (please see the SOXX chart), it seems that these stocks are still searching for a base.
For domestic investors in the region, we will continue to ride on finance sector, marine and shipping sector, oil and gas sector, commodity or agriculture sector, real estate sector (watch out for policy changes), and tech sector (selective stocks). It is always prudent to have a basket of stocks to achieve what I called a natural diversification. However, one should bear in mind that we should not diversify for the sake of diversification, we should still need to follow our investment process closely to derive our investment decisions (reference: The Essence of Stock Investment on www.master-rider.com). The key risks out there are policy risk as well as event risk. Both risks are something investors cannot control and they are hard to predict, However, this should not deter a smart investor from monitoring the situation closely and take appropriate action immediately should they happen.
Sit tight and enjoy your liquidity ride and make sure you build in some safety features in your investment stragegies. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
November 1st, 2007
NW Teong
This morning, I read an article titled “Jim Rogers Shifts Assets Out of Dollar to Buy Yuan” from Bloomberg website with great interest. For those who wish to read this article, you may wish to click the link here:
http://www.bloomberg.com/apps/news?id=20601087&sid=aqNT0qlW_zQE&refer=home.
The gist of this article is that Rogers is very bearish on US dollar and very bullish on China RMB or yuan as well as commodities. He feels that yuan could appreciate as much as quadruple in the next decade. On currency front, he is also bullish on Swiss Franc and Japanese Yen.
Rogers remains very bullish on commodities, he feels that the bull in commodities could last as long as next 5-15 years. While I am not able to predict how long the bull would last in the commodities, what I noted with great interest is that Rogers’ view on currency as well as commodities is basically in line with my own (for those who read my blogs for the first time,
please refer to my earlier blogs).
Rogers also feel that the bull markets for stocks and bonds are over. While I share his view on bonds, I bet to differ on the stock markets.
I feel that we still have one last leg for bull on stock markets (please read my earlier blog on this, also my comment on yesterday’s blog “Big Scare”).
Base on the above view, we should then devise our investment strategies accordingly. Please note that if investors such as Rogers are switching their US assets into Asia based assets, many more will follow. What will happen then? Logically speaking, if the initial trickle leads to a stampede, US$ will collapse vis-à-vis other currencies. We have to watch out on this space. While a gradual depreciation is acceptable, a sudden collapse of US$ would be very disruptive to global trades and hence would be bad for world economy. I am sure Rogers is not the first one to shift its US assets into Asia assets (especially China and India) and obviously he will not be the last one as well. On the contrary, there will be more investors to follow this path. If you can recall, we have already witnessed some divestments of US assets by Asian sovereign funds. It is definitely worth while to monitor the funds outflow from the US and its impact on the weak US$. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
October 24th, 2007
NW Teong
