Beware of the Crude!
May 9th, 2008 NW Teong
Posts filed under 'Singapore'
Up-Trend?
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,
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
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.
2 comments April 9th, 2008 NW Teong
Market View 25 Mar 2008
Thank you very much for attending my seminar on 22 March 2008 organised by SGX. The response was indeed overwhelming and was much better than my expectation despite the bearish mood in the market as well as a holiday one day before the event. During the seminar, I have made some comments with regard to market view which I briefly listed down as follows:
1) I have said this in Oct 2007 that stock markets in 2008 will be more volatile than in 2007. I reiterated this again. I also said that there might be some true value to pick through out this year.
2) Base on some of the macro indicators that I monitored, stock markets are at or near the bottom already. Look at the 10-year Treasury yield (you can see this chart at yahoo finance, ^TNX), at 3.35% on 10 March, it was very near to its 5-year low of 3.1% registered on 9 June 2003. This tells me that the US Fed will have little room to play as far as interest rate policy is concern. Caution note: never just look at one indicator to make decision, one should learn to use multiple of indicators to reinforce one’s view!
3) Investors should monitor value stocks very closely now and with the intention to buy decisively whenever the target buy level is being breached. Do not panic if you have done your proper study and all indicators pointed to a screaming buy! For instance, I have always used Venture Corp as an example, I had urged investors to buy immediately when it was being bashed down to around S$7.50 on 3 of Jan 2008 (A rare chance indeed!). Please read my blog on Value Buy?
4) Short-term, commodities investment will pose very high risk. As explained in the seminar, investors are likely to lock in their huge positive gains in their commodities positions in view of huge losses in other asset classes, namely fixed income (most bonds, especially those linked to subprime loans), equities, properties (especially in US) and so on. It is all about asset allocation and portfolio restructuring that I mentioned in the seminar.
5) Markets would still be volatile in the next few months, tread with care please! Macro picture is vital at this stage.
6) Monitor China economy and stock markets closely, both before and after the Olympic game. It will have huge impact on regional markets.
In short, I urged all potential investors to continue to enrich your investment knowledge, to apply such knowledge on your investments. Always have a good system in place, be as conservative as you can (at least for beginners) and with a right mind set…..etc
I know I am a bit long-winded, but it is all for your own good! After the seminar on 22 Mar 08, many of you have emailed to enquire about my own investment seminar. I would like to use this opportunity to inform everyone that I do not conduct my own investment seminar more than two years ago. However, in order to still share my years of investment experience and knowledge, especially those proprietary worksheets such as valuation model, portfolio sheet and Master Rider System etc that I have created, I have converted all these into e-publications and are available via this web site: www.master-rider.com, including my investment seminars (both in English and Chinese). For those who are also interested in
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.
Add comment March 25th, 2008 NW Teong
Investment Seminar on 22 Mar 08
For those who wish to catch me on this first and last investment seminar for 2008 organized by Singapore Stock Exchange (‘SGX’), you are most welcome to attend! For registration detail, please check with the staff of SGX or visit its website: www.sgx.com.
Once again, other than the investment knowledge, I shall share with you my macro view too in the above seminar. For those who have attended my investment seminar in Oct 2007, I am sure you could still recall some of the predictions that I made for 2008 that have come true. I predicted that crude oil is likely to exceed US$100 per barrel, stock markets will be more volatile in 2008 than in 2007. Chinese stocks will correct severely before the Olympic…etc.
Anyway, I have to clarify here that my job as an investor is not to make predictions, rather we make educated and logical deductions of the near and long term outcome. My wish is that after attending my seminar, as well as acquired further investment knowledge either from my website (www.master-rider.com) or other sources, you will be able to make good logical deduction. As I said many times before, once you have mastered the skill on analyzing the macro picture and hence ride on it, you would become a great investor. Of course, you must also have the right attributes of a great investor lah! While I try not to advertise my own e-publication (via this web site) through my personal blog, I cannot help but to share with you this great news that, there are constant stream of investors purchasing them from my website EVERY MONTH! Congratulations to those that have purchased, these e-publications are really great value for money. For instance, I really don’t understand those who paid few thousands to acquire some basic knowledge and trading strategies on US options, one could easily acquired those knowledge at a fraction of the cost via my e-materials. The key reason, in my opinion is that I do not advertise them. Most investors are attracted by the huge profits advertised by these live seminars. Alas, don’t they know that if it is so easy to make huge profits day in and day out, the seminar presenters would not have time to teach as they would be very busy raking in tons of money (investors, especially budding investors please wake up and don’t dream of huge profits in a short time!).
As mentioned in my last blog, this current volatility will play out in the next few months. Monitor closely and you would have some great opportunities for positioning.
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.
Add comment March 10th, 2008 NW Teong
Last Shoe to Drop?
For those who have read my Chinese New Year message, “Gong Xi Fatt Chai” posted on 1 Feb 2008, you would realize that why I have predicted a more volatile 2008 as compared to last year. The short answer is just simply the macro picture is deteriorating!
In a way, the Americans are going through what I call a transitional pain as far as the US economy is concern. At this juncture, they not only have to adjust to slower economy growth (or even a recession) but at the same time have to endure a high inflation rate. As mentioned before, between growth and inflation, the choice is obvious for US Fed. Just like the employment figure, inflation is a lagging indicator. While the inflation pressure is high at the moment, it will subside gradually if the slowing of the macro economy is gathering speed (more signs pointed to this right now). No surprise that US Fed would continue to cut its interest rate, no surprise that inflation rate would remain in the short term.
What would happen to the stock markets then? Well, the stock markets would react accordingly. That is market would retreat when the bad economic numbers are announced and would rise when Fed cut its interest rates or some positive news in the markets such as big M&A news etc, hence the volatility of the stock markets. This would continue to happen until one force dominates the other. The likely scenario would be that the macro economy would continue to slow and the policy makers would try all their means to reverse that. This is going to play out in the next few months. An optimist would say that by the 4th quarter of this year, the growth engine would start to roar again!
Before we talk about recovery of US economy, investors have to ensure that they survive for the next few months. We have to be aware that the massive downgrade of credit rating on bonds (corporate bonds, bonds of bond insurers, municipal bonds….etc really all kind of bonds) by credit agencies has barely begun. We have to watch very closely with regard of this development as it would have a huge ramification throughout the entire financial industry. This perhaps would be the last shoe of the market to drop?
What strategies to use? No change, we should still stick to value strategy as well as investrade strategy (need special care to use this, please refer to e-book, “The Essence of Stock Investment” or the e-seminar with the same title). 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.
Add comment February 6th, 2008 NW Teong
Gong Xi Fatt Chai!
Dear friends, readers, students and fellow investors, I would like to use this opportunity to wish every one a bountiful year of Rat! May your year of Rat be filled with happiness, wealth and lots of good health!
Looking at the stock charts, it is clear to me that stock markets are trying to form a base after experiencing huge volatility in the past four weeks. In fact, the huge plunge started around 26th and 27th Dec 2007 (i.e. right after Xmas) and began to slow down around this time. While we may still see some volatility in the markets, I think this volatility will gradually subside over time, perhaps until the next new stimulant (i.e. new factor to stir up the market) comes about. This is like a ball dropping from a high level and the ball will bounce off high from the floor initially and the bouncing will lose momentum after a while.
Having said the above, my personal view is that 2008 will be a much more volatile year as compared to last year. Firstly, the macro picture is expected to deteriorate and perhaps will start to recover by the last quarter of the year. If this is true, it will surely create a huge turnaround of the markets, hence a big downs and big ups for the markets. If we assume this is true, other than the value strategy, we could also use what I coined the “investrade” strategy as explained in my e-book and e-seminar. Secondly, we have to be mindful of events which are able to affect world economy, such as
For this year stock markets, one needs discipline, wisdom and more importantly patience to reap big gains. Of course, using the right investment strategy would surely help.
In summary, my short term view is that while markets remain volatile, the volatility will gradually subside with time. However, my overall view for this year is that market as compared to last year would be much more volatile. Please continue to monitor the macro indicators very closely! Please note that a volatile year can be a very rewarding year too!
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.
Add comment February 1st, 2008 NW Teong
Value Buy?
I have mentioned that market would be volatile on the downside biase in my blog “Happy New Year” dated 3rd of Jan 2008. Market indeed was very volatile and falling like a stone few days before.
In fact, I have emailed to all Master Club Riders (i.e. whose who have bought any of the e-publication from master rider web site: http://www.master-rider.com) on 22nd Jan 2008 to advise them to invest in Venture Corp at that point in time. My whole email message to Master Rider Club members as follows:-
Dear Master Riders,
As mentioned in my blog on 3rd Jan, market would be volatile with the tendency on the downside. This has been proven right so far. With the relentless selling by the investors, some value does appear for some of the good blue chip stocks.
Yes, I would think Venture Corp at $8.3 is a very good buy, with prospective PER of about 7 times and dividend yield of around 6%. This stock at this price is really a rare pick! I would not hesitate to buy at this level and hold for at least the next twelve months (longer if needed). Remain clam amid the turbulence and you would be alright.Wishing all of you a bumper crop in the year of Rat! Cheers!
The reason for posting this email message is sharing this message with all of you: We should not hesitate to accumulate value stocks when the time is right!
As I have shared many times with my fellow students as well as readers, we should adopt different strategy at different time. We all know that business and economy are cyclical, for instance, when economy is coming from the bottom and is growing, we can use buy and hold strategy. When it is growing at greater pace, i.e. economy is accelerating, we can use both buy and hold as well as momentum strategy. On the same note, when the macro picture is slowing down like now, we should be extremely careful (for reasons that I have mentioned many times, please check back my past blogs and e-publications). In fact, I would always advise people to divest way before this happen. My dear friends, if you use the Baltic Dry index (“BADI”) as leading indicator to time this divestment, you would not be doing so badly. Please refer to my blog “Chart-wise on 28 Nov” and also the chart below:
If you follow the BADI, then you would probably divest your portfolio on around 23rd November 07, i.e. when the index started to plunge where the stock market was still stable. Please note that this index has crossed down the stock index on around 23rd November which indicated a souring mood for market in time to come.
As mentioned, we have different stages in an economic cycle. This is like driving, when we are going up a slope, we use 1st or 2nd gear and when we are on a downhill slope, we use 4th or 5th gear. Similarly, at this moment in time and at this stage of economy, we have to adopt the value-investing strategy (similar to Warren Buffet) where we prepare to buy good value blue chip stocks when good value emerge and are prepared to hold for longer term. Unfortunately, many investors only have single gear and simply do not know how to adapt to changes in the economy.
Who says you cannot bottom fish? You can bottom fish provided you know two things: first this is the real bottom (for the market or more importantly for the stocks that you are going to invest) and second you must know what fish to catch. You need to catch big blue fishes than small frail fishes which may die half way through your holding period (especially times like this)
How do I see the market from now on? Well, stock markets would definitely remain volatile in the next few weeks. Please take a look at BADI, it is still dropping. However, some good investment opportunities would continue to appear along the way. As usual, do your home work and accumulate your valued stocks along the way.
Congratulations to all Master Rider Club members who have bought Venture Corps at S$8.30 or below (after I have sent out the email, it went down to as low as S$7.70). Currently it is at around S$10, you may wish to lock in profit if you like, A profit of 20% is the objective of our short term trading target, of course, you may also opt to hold a longer term if you wish.
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
5 comments January 24th, 2008 NW Teong
Happy New Year!
Hi, I would like to wish every one a very happy new year and that all of you would have a new year filled with joy, plenty of wealth and lots of health.
I am sorry to say that I have not blogged for quite sometimes due to my heavy commitment in my private equity career. This is not an excuse, more importantly I feel that there is nothing much to talk about the markets in the last few weeks. To put it simply, there are no new factors to talk about on the markets. Markets are basically still spooked by the depth of the sub-prime loan debacle and its severe impact on leading financial institutions.
Due to the sub-prime problem and its impact on the financial institutions as well as on the macro picture, markets would be volatile with the tendency to trend downwards in the next few weeks. In short, investors should all be wary when macro picture is turning down, i.e. GDP growth rate is coming off. Under such scenario, we should not invest in the equity markets if we can afford to. What shall we do then? Well, we should continue to monitor the markets and wait for good opportunity to go in or at least when macro picture started to turn up again. We may not know how long the economic slow down will be, nevertheless we should be patient to wait for a turnaround. However, if we have to invest at this moment, we have to really look for value-stocks and prepare ourselves to hold for a longer term. My own view is that if we can we shall put most of our money in safer instruments such as government bonds and some money in in-expensive value stocks which we prepared to hold longer term. These stocks preferably also give out 4-5% dividend per year. Be cautious and conservative. The Santa Claus rally, if any was really muted last year and I do not think there will be any Capricorn effect this month. On the contrary, markets would be extremely volatile.
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.
7 comments January 3rd, 2008 NW Teong
Santa Claus Rally?
After I have published my blog last week on “chart-wise”, interestingly the global stock markets from US to rest of world have started to rebound in anticipation of another interest rate cut by the US Fed. In fact, most charts including the Dow and Nasdaq indices have managed to rise above their respective 200-day MA. In addition, the Baltic Dry Index also rose in tandem in the past few days. Whether these global stock indices will continue to rebound remains to be seen.
Have we seen the worst of the sub-prime loans debacle already? A quick glance on the chart of 10-year Treasury Note below shows that investors are still jittery as they bid up its price (so that the yield is falling). This is typical of “flight to safety”. In my opinion, the pre-condition for a rally is the stabilization of this chart
In short, stock markets will still be volatile looking forward. Once again, stock investors are looking at US Fed for rescue. Indeed, almost everyone is waiting for Fed’s rescue this time. This includes the borrowers, lenders as well as the investors. All eyes will be on FOMC on 11 Dec 2007.
Should the US Fed decide to cut the interest rates on its coming FOMC meeting, the markets are likely to take off from there and we could possibly still have the Santa Claus rally. In fact, the next few days are critical to decide the trend of the stock markets for rest of the year. Will the dip in November just like those in June 2006, Mar 2007 and Aug 2007 where the stocks subsequently rebounded and moved higher? If you take a look at the charts, one interesting find is that from June 2006 to the next major correction, i.e. Mar 2007, it takes about 8 months and about 5 months to the next major correction in Aug 2007 and another 3 months in November 2007. Hey, these are the Fibonacci series (1,1,2,3,5,8,13,21,….) in reverse order! Does this mean that the next major correction is around end Jan or early Feb of 2008 (right after the Chinese New Year)? Well, this is just an interesting observation, we still need to do the usual, i.e. monitor the macro picture, monitor the trends etc. All said and done, I am still hopeful for a mini rally in December and possibly extend into Jan next year!
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.
1 comment December 4th, 2007 NW Teong
