Master Rider Blog

Beware of the Crude!

NW Teong — Fri, 09 May 2008 07:38:15 +0000

Up-Trend?

NW Teong — Wed, 09 Apr 2008 07:27:03 +0000

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.

Market View 25 Mar 2008

NW Teong — Tue, 25 Mar 2008 03:26:16 +0000

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 US option, the e-seminar on US option is considered the BEST value that you can ever get. Instead of paying thousands of dollars to attend other live seminars, getting the e-seminar (a fraction in terms of price) is surely a wise option to take. You would be surprised on the end result!

Investment Seminar on 22 Mar 08

NW Teong — Mon, 10 Mar 2008 09:56:28 +0000

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.

Last Shoe to Drop?

NW Teong — Wed, 06 Feb 2008 03:06:49 +0000

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 4^th 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!

Gong Xi Fatt Chai!

NW Teong — Fri, 01 Feb 2008 02:30:49 +0000

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 26^th and 27^th 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 US President election, China Olympic etc and on regional impact the Taiwan President election, Malaysia election…etc. Depending on the outcome of these events, they may sway the markets in one way or another. Thirdly, weather can only get more chaotic with times (until such time that we, human being are willing to sacrifice some growth and hence economic gain for the sake of environment. We should stop raping the mother earth anymore for there remains very few virgin lands around!). Fourthly, this is related to the above weather change. We will continue to be plagued by various diseases such as bird flu and perhaps other new and varied diseases.

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!

A False Break!

admin — Sun, 27 Jan 2008 01:31:41 +0000

Both the DOW and Nasdaq indices were being bashed down last night in US due to various bad news. In short, the “W” shape that I spoke about in my blog yesterday was no longer true simply because it will not be a “w” shape any more. The spike up in Nasdaq the day before yesterday was more like a false break on hind sight.

Hence, we shall square off (i.e. lock in profit or cut loss) all our tech trading positions immediately. For those in Singapore, I have noticed that Venture had surged more than 5% yesterday and if you sell now (around S$9.95) you could still make about 3% after netting off the trading expenses. While this is not truly a great trading opportunity on hind sight, we shall be fast to react to new info.

We shall remain at the sideline with zero position and forget about the “W” shape for the time being. Nevertheless, we shall continue to monitor the markets in search for another good trading opportunity.

Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”! Welcome to visit the #1 value-added stock and option investment education website in the world, www.master-rider.com!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.

Medicare Ambien

Watch Out for Tech Stocks!

admin — Sat, 26 Jan 2008 02:16:43 +0000

Despite my bearish view on the macros in my past few blogs, I feel that we should not miss out on short term opportunities (provided we can spot them).

Purely from chart point of view, tech stocks are poised to bounce strongly (from NOW onwards) and could last at least the next 3-5 trading days of course bearing unforeseen circumstances. Please see Nasdaq chart below:-

The Nasdaq has just formed the second base of a nice “W” shape. This is what we called a double bottom in technical analysis and is a strong signal for a reversal. Of course, nothing is 100% sure, what we can say is that the probability for reversal is very high when we see this signal. If we look at the SOXX index (see below chart) which is a leading indicator for tech stocks, it has a similar “W”

While I see this as a good short term trade, it does not indicate anything on the long term outlook. Hence, we shall not be too greedy and always remember to set a target price (set a trailing stop when positions already in profit) and a cut loss price (e.g. event risk). Never let your winning position to become a losing one.

Please note that you are responsible for your own trades and you are reminded to read the disclaimers at the bottom of the home page of www.master-rider.com. Good luck!

Value Buy?

NW Teong — Thu, 24 Jan 2008 07:39:19 +0000

I have mentioned that market would be volatile on the downside biase in my blog “Happy New Year” dated 3^rd 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 22^nd 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 23^rd 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 23^rd 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 1^st or 2^nd gear and when we are on a downhill slope, we use 4^th or 5^th 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

Wake-up Call!

admin — Fri, 18 Jan 2008 02:24:36 +0000

I have warned investors on the impact of a high crude price in my blog posted on 9 May 2008. I wonder how many have heeded my advice.

While the macro picture is murky at the moment, it is crystal clear that most bets (on the stock markets) are off if crude is able to stay at current price level (i.e. between US$125 to US$135 per barrel). The logic is simple, if the crude is staying at current price level for a sustainable period of time, it will have a dampening impact on most other industries. In short, it will single handedly drag down the world economy. The worst scenario is GREAT DEPRESSION. However, before we reach great depression, the world economy will slow down fast enough to force the crude price to drop to a more reasonable level (something below US$100 per barrel?). Then a new equilibrium is achieved among various parameters including the crude oil before we experience the global growth again. I do not know when this will be, however in one of my earlier blogs last year, I have “predicted” that the credit crisis triggered off by the US subprime loan will only be over by the end of 3^rd quarter of this year. Thus, I feel that between now and the entire 3^rd quarter, we will still witness a highly volatile stock market!

For those die-hard investors, you have to be very selective and invest only when great opportunities are present. Otherwise, it is better to extend your holiday (as mentioned in my blog on 9 May 2008). Before you do that, make sure you put your money in one of the safest instruments.

I am really surprise that most governments have done so little to help solve this (high crude oil) issue knowing its dire impact on world economy, and thus all mankind. Every one in the world should change our lifestyle IMMEDIATELY, i.e. do everything one can to conserve as much energy as possible. Government can surely help by building the right infrastructure and thus creating a more conducive environment for walking, cycling etc. It will be my dream to see all major cities to have special lane or path which have plenty of trees at both sides for cyclists. If the environment is nice to walk or cycle, I don’t see why people have to take a car ride to travel 300 meters from point A to point B in a city. This will increase the quality of life in a city as the air will be less polluted.

In fact, I am sad to notice that most governments are still being boxed down by own domestic affairs so much so that they have lost focus on these urgent issues such as preservation of environment, food crisis, energy issue etc. Current situation (earth quakes, heavy floods, etc) really warrants a top most attention from governments of major economies. If I have to use the color code to describe the degree of crisis now, it should be a RED ALERT now. At the moment, some people in different part of the world have died due to environmental havoc such as earth quakes, floods etc and many more are dying due to impending food crisis. Do we want to wait till the lives of half of the world population are being threatened before we take serious actions?

With the rate that we, human beings are destroying the environment, I wonder how long can we continue to breath in fresh air, drink clean water and eat un-polluted food. All of a sudden, an image of Martian with head gear and oxygen tank flashes across my mind……… This really sends a shiver down my spine!