Samgoss said...
Rookie, is 28 Feb 08 is d date to sell off all yr shares ? my answer is : I dont know " , no matter what, i will stick to my initial plan, sell along d rise ! minimise yr portfolio when mkt going higher n higher ^V^
D reasons y i want to dispose most of my shares by 28 Feb 08 !?
1)D bull was started at beginning of 2006 ( check yrself :-Hang Seng, SSEX, STI n Kopsi ), according to history, d life spend for bull is around 18 to 24 months +, SSEX n HangSeng r at historical high in fact it is already sky high ! due to olympic effect + more fed cut ahead, i forsee there r still strength for Asia stocks to move for another 3 to 4 months, couples with traditional good month for year end n CNY, I think mkt momentum is still there from now till CNY. no matter what, always remember d golden words " there is no forever up mkt n also no forever down mkt " ! hence , i decided to minimise my portfolio to at least 1/3 by coming 28 Feb 08.
2) According to my 8 zhi =birthdate ,next year is a bad year for me n those who r same age with me , next year is not a year of attack, it is year of defence ^V^
Is my 2nd reason acceptable by u, ? well.. different ppl has different believing, i believed in fate n feng shui, when d luck n strength r not on my side, i will choose to retreat ^V^
AM i sound like feng shui lo ? ha ha..to be frank :- I AM :}
October 27, 2007 1:33 PM
***
See how Ma How Pau uncle sam is ? ha ha , my timing is abit out.. sighhh ! she came one month earlier than my estimation !
I have changed my strategy from hold to " hit n run " ! first , I am minimising my portfolio by selling off 2/5 of my mahsing @ 1.85 for some profit taking , later on , I will sell my other stocks on strength b4 CNY , I dont think KLSE able to climb above 1,420 b4 8 of Feb !
As can be seen, mkt sentiment getting weaker , SSEX is crashing , volume is thin, d most killing part was " Mkt confidence is not there anymore " everybody waiting to dispose their stuck shares ! how to rally up in short term ?
Is there any GE rally after CNY ? after recent plunge , I think d GE rally is only applicable on certain political stocks only , it wont spread across d board like what we predicted b4 d world mkt slump !
When time to retreat , RETREAT ! no stocks can go against d gravity in bear mkt ! be it FA or Non FA stocks ! d different is if u r buying FA stock , u will be benefited in long term but u hv to lose some opportunity n holding cost !
Though my target of 700K gain by this coming 28 Feb had gone with d wind after d recent slump , but to maintain my 568K realised gain shouldnt be a problem for me at all ! just like what d great WF said :- To make money from shares mkt is dont "LOSE " !
The attached picture is actually an ancient Chinese astrology called iching , take it as a guide for yr shares investment 4 year 2008, fyi, it did talked about "strength in metal " last year , look at how metal performed today !? believe it or not ? u decide ^V^
44 comments:
Sold another 10 lots of mahsing @ 1.87 for some quick profit ^V^
Look at d overall volume, thin damn bloody thin.. mkt rose 10 points but only selected counters moving... 2molo is last trading day of d week.. dont forget cny aprroaching next week.. DOW already rose >300 points ( rate cut factor in ?) since last week.. upside potential 4 DOW is very limited even with 0.75 rate cut !
Take profit or Sell on strength , wait 4 opportunity 4 another hit n run ^V^
Tomolo (THURS) is the last trading day of this week? Fri holiday ka? Back to stocks. Liondiv is currently trading quite close to its 12 months low at 1.51. Do you think it will break this low?
Eric.. answer 2 yr question :-
Future earning is d most difficult part of share investment. win or lose very much depends on it ! u will still lose with stock @ PE < 5 if its future earning turns againts yr forecasting !
2 minimise this risk n maximise d chances of win , I will look at their past earning records , second who is d man behind this company ( Management back ground ), their historical PE ^V^
After all these , then only i look into their future prospect , what is going on lately, 4 example :- 9 mp , shortage of steel supply , crude oil hike , increase of steel price .....
RHB is one of d best web in town , she enable me to compare its earning qtr by qtr , from there i will know how good is its coming earning.
4 example , bkoon , its 3rd qtr earning is come down from 4cts to 2 cts , this giving me an alert signal !
4 margin of safety , I normally go 4 Low PE stock , this is to minimise my risk if anything goes wrong on my forecasting !
another 5 lots sold @1.87 ^V^
2 sour TA buggers..sorry to tell u ,it is still in profit zone 4 mahsing..doubt ? check my cost of entry as per picture attached ! jgn marah yah ?
To humble bloggers n all .. pls take note , d above LCLY posting is directed to sour buggers only , not 4 u guys ^V^
4 those newbies who still making nett losses at this moment, i know very well, it is really painful 4 u to chop yr shares n stay away from KLSE 4 d time being ^V^
Besides this , what better way can u think of ? this is shares mkt , she doesnt care who u r , no one can goes againts d gravity , protect yr capital 4 d next bull !
chinese saying :- lau tak cheng san joy , na pa mo chai siu !?? means as long as u r loaded with bullets, mkt is always there ^V^
Friday 1st of FEB , wilayah day ^V^ all d states hv to work except labuan n KL ^V^
Liondiv ? 1.51 ? break its low ? sorry no TA talk with me ..ok ? break its low or not ? it doesnt really matter , most important it is dirt cheap at anything < 1.60 , buy in now ? ha ha..not at this moment, furtehr more , I hv some in hand already ^V^ ..
WB : BUY WHEN OTHERS START PANIC SELLING !
Wow, UBS reported USD12bil subprime write down losses!!!! More to come ... stay tuned.
Sold all my ECM @ 0.82 with realised losses of 2,000+, ha ha happy to know that..sour buggers ?
Told u already, uncle sam will post ever sales n purchases b4 hand ^V^ Cannot always declared gain one lah..once in a blue moon, I need to declare losses also. betul ?
Hang Seng coming down..ssex softening..Dow future minus 50-..2molo is last trading day of d week.. is Rate cut already factored in ??
As expected , KLSE will not go far above 1,420 n it is now softening ..after disposal of Mahsing n ECM, my shares explosure reduced to only 2/5 ..cash vs shares is now stood at 0.75 vs 0.25 .
u see what i see ^V^
Hi Sam/Ben,
I have some Tebrau @ 1.28.
Do you think it's better to sell it?
Thanks
Mac
$ifu, try many times 2 post but failed, hope tis time OK.
Market really within ur expectation eventhough it happens 1mth earlier but already proved tat u r d most reliable $ifu 2 follow!
follow u 2 sell my holding- Liondiv @ 1.60 without any gain coz i bought a bit high @ 1.72. Too bad but play safe hope 2 buy back @ lower price later.
Korean men's single final was 1 of d most exciting match i ever watched not only d "fight" between Lin n Li but also d dispute n conflict between Lin Dan n Li Mou. n also thanks 4 providing me such a informative ifeng website, really enjoy reading.
2 hwh1.. to ask ppl to cut loss is not my style.. I am here 2 show u guys as an example what I do when mkt is under going bearish zone !
IF 300 points up from DOW has no impact on Asia stocks esp KLSE, what do u think of 2molo ? if Dow dow down a little tonite , what do u think of KLSE 2molo ? dont forget.. long holidays approaching, who wants to hold shares for such a long period ? n who want to push d stocks up for those stuck buggers to sell off their holding ? common sense !
Confidence of d mkt is no longer there , one tiny unforseen bad news will sent d mkt down to hell ! stay a side n sell on strength ! if u cant protect yr profit , protect yr capital !
Mkt is always there !
2 hwhl..u decide
Sam,
Thanks for the advice :)
How about your holding in Onastel?
Do you have any plan on this?
DOne ! Sold my last 10 lots of Mahsing @ avg 1.88+ ^V^
55 lots of mahsing done @ 1.87 with realised profit of RM7,000+ .
ECM realised losses = 2,100+
2 all , I know they r ppl saying , is good to buy on panic mkt , u can only get cheaper price in bear mkt , but then..u must understand..d situation now is not d same anymore, most of d asia stocks r coming down from d peak ! they hv gone thru d super bull run in past 2 years , their stocks n mkt PE is no longer single digit esp SSEX ! further more , there will be more n more bad earning results qeueing up for beheading by US finance firms !
DOW @ 12,400 is definitely over price , she should trade around 10,500 +- !
Luckly we hv pending election for government to support our mkt, can u imagine what will happen after election ?
Stay away from share mkt will not make u looks a little stupid, still d same old saying, make less is better than lose ^V^
I will not jump in to buy if mkt confidence is no longer there !
118 , yes..that was one of d most exciting I hv ever seen too.. anyway, we cant blame d koren 4 all d false line calls, coz chinese did d same also in both china n Hk open! fair mah ^V^
I am waiting eagerly d rematch btwn lin n li in d coming opens..ha ha.. how nice if li yong bo sit face to face with li mao !? ha ha//
Onastel ? i hv posted in my previous posting , I hv swap both Hiaptek @2.01 n Onastel @1 .48 to liondiv @ 1.68 . check it out yrself.
Reliable sifu ? pai seh pai seh lah.. i am just sharing my method with u guys only.. talking about reliable sifu, tak lain tak bukan WARREN BUFFET is d one u should follow not me ^V^ ha ha
looking forward for d coming All England open this coming March, Taufik said he is earger for his first ever All Engalnd Champion ! ha ha let see..can he do that ?
Ben, sam already sell all his ECM....wat about u?follow or stick wif your plan....sell after the announcement u waited so long?pls let us know.
$ifu, just now Astro had d replay of Korean open semi final, so 2molo 4 sure there would b replay of d Final. just try 2 tune in @ 6 - 7 pm if u want 2 watch d dramatic men's single final again.
As u said Bull market normally last 18 - 24 mths, what abt Bear market, how long it will last? So when do u think d best timing 2 enter d market again in 2008?
Asking these question coz i hold ZERO share in hand now n waiting 4 d worst 2 come n hopefuly could buy back @ a lower price.
I'm Tiger, is 2008 good 4 me in share market?
Thank you sifu sam. Appreciate your efforts answering all the Qs. Btw, regarding my 2nd question, how do you calculate EPS growth rate if it involves negative or zero value? Do you ignore it, use the next figure or....?
TQ.
\o/
Sifu Sam,
Should i wait for end of Feb or March to dispose all? Iching said March and April provide a very good chance in share market.
I am still holding quit a number of ecm,evergrn and rcecap. Lose 12% overall. Do not know what should do now.. Or should i do nthg now? Can sheld some light ?
Dear Sam
When I asked if Liondiv will break its low of 1.51 I was not speaking of TA cos I know nuts about TA. I was wondering if Liondiv will go lower than 1.51 amidst the bearish tone of the market now.
BTW I belong to the Dragon animal zodiac sign. 2008 good for dragons onot for stock investments?
Good luck..it is depend what is yr current cash vs shares ratio, though I know Mahsing n ecm r still under its FV but still i sell them off is bcos I dont want 2over explore my share holding, u can see how I control my share exposure 4 past 1 year , this is what ppl called risk management ^V^
Make more n lose less is how u beat MR MARKET ^V^
Stay tune n see how uncle sam tame d bloody bear ^V^
I will not buy in any shares b4 eve of CNY 4 hit n run ^V^
I will still hold on to ECM because my purchase cost is only RM0.845.
as for Liondiv, I'm still holding some but notice William Cheng is selling down significant stake around RM1.6+. I think Cheng family is also not looking good at the overall market outlook. I will follow their step to sell on rebound. Properly will swap to some other counters has better short term rising possibility.
Sam...
I agree... A blog must stay healthy with proper conduct from all who wish to chat and exchange ideas. Foul words should never surface irregardless of conditions.
Especially with the CNY around the corner and trying times like these.
Nevertheless... I wish all a prosperous CNY. Let's hope there will be a rally for us to get some ang pow this year.
Yee hah... By the way, I am also under the zodiac sign of the horse.
Tread carefully lo... Don't gallop into a ravine. Ha ha ha ...
Sorry BZ.. ha ha I thought u r d sour TA bugger pegasus 101 from osk forum , one of his follower email me saying that osk forum closed down bcos of him ! he posted all d 4 letters words like what chinyk did in d pass, actually they hv a few good FA sifus over there , one of them is samksgoh ,really feel sorry 4 those innocent forumers .
back 2 liondiv.. as u know i am still holding on my liondiv with avg cost of 1.62+- , this stock is way way way under value , she is too darling for me to sell her off..i prefer to keep her under my pillow ^V^ is it bottom up ? I am not sure , but what I know she is my lucky stock , I hv made >30K from her since early 06, hence.. i believe she will bring me good luck in mid n long term.
Keep it bro ^V^
2008 is a very good year 4 Dragon ! can i tumpang yr luck ? ha ha 2008 is not my year..anyone can i tumpang yr luck ? ha ha
TL : WHAT THE CRAB IS HE DOING ?
2887 LIONDIV, LION DIVERSIFIED HOLDINGS BHD
Changes in Sub. S-hldr's Int. (29B)
30 Jan 2008, 18:41
Particular of Substantial Shareholder
Name Tan Sri Cheng Heng Jem
Address Penthouse, Level 48
Menara Citibank
165 Jalan Ampang
50450 Kuala Lumpur
NRIC/Passport No/Company No 430319-71-5033
Nationality/Country of Incorporation Malaysian
Descriptions (Class & Nominal Value) Ordinary shares of RM0.50 each
Name & Address of Registered Holder AMMB Nominees (Tempatan) Sdn Bhd
AmTrustee Berhad for Amsteel Mills Sdn Bhd
22nd Floor, Bangunan AmBank Group
No. 55 Jalan Raja Chulan
50200 Kuala Lumpur
Change Detail
Change Date 29 Jan 2008
Change Reason By virtue of Section 6A(4)(c)
Nature of Interest Indirect
Transaction Detail
Transaction Type Date of Change No of Securities Price Transacted (RM)
Disposed 28 Jan 2008 6,768,100 0.000
No of Securities after Change
Total Share after Change 430,683,295
Submitted By :
LIM KWEE PENG
Dear Sam,
Wah so this year good year for dragons as far as share investment is concerned? Good good then I will be investing.
Of course you are most welcomed to tumpang my luck but you have to keep recomending me those good low PE stocks and then I buy and you follow kekeke. Like that can or not?
TL n all, 6.7/430 x 100% = < 2% of his total holding , considered alot ? in d same time, UOB trust bought in quite alot recently :-
Date of Notice : 29/01/2008
Transactions:
No. Date Transaction Type No of Shares Price (RM)
1. 28/01/2008 Disposed 6,768,100 -
Circumstances by reason of which change has occurred:
By virtue of Section 6A(4)(c)
Nature of Interest:
Indirect
Consideration:
No of Shares Held After Changes:
Direct : 0 shares (0.0000%)
Indirect/Deemed Interest : 0 shares (0.0000%)
Total : 430,683,295 shares
Remarks:
N/A
Submitted By:
LIM KWEE PENG
UOB :-
Tuesday, 15 Jan 2008
6:33PM PROPOSED RCSLS AMENDMENT
5:48PM UOB Asset Management Ltd (662,900 Shares Acquired)
5:48PM United Overseas Bank Limited (662,900 Shares Acquired)
Friday, 11 Jan 2008
7:06PM UOB Asset Management Ltd (337,100 Shares Acquired)
7:06PM United Overseas Bank Limited (337,100 Shares Acquired)
Tuesday, 8 Jan 2008
6:40PM ACQUISITION OF A SUBSIDIARY
Friday, 4 Jan 2008
8:24AM United Overseas Bank Limited (500,000 Shares Acquired)
8:22AM UOB Asset Management Ltd (500,000 Shares Acquired)
Wednesday, 2 Jan 2008
12:45PM United Overseas Bank Limited (38,665,000 Shares Acquired)
12:45PM UOB Asset Management Ltd (38,665,000 Shares Acquired
Dear Sam,
I notice liondiv is disposing its shares in Parkson also..
Is it a good sign? since at price of parkson today 7.7.. they still earn a premium of 3.7 at the conversion price of 4 for the RCULS
iz, Liond core biz is now DRI, this biz itself worth around 2.50 , she has RM500 mil redeemable convertable loan stock of Parkson ,with this she worth about 962mil.(125 mil x 7.70 (current price of parkson) )/ total shares of Liond giving u 1.30 per shares, dont 4get she is having stake in both Lionind n megasteel also, + cash rich in hand after split, thus, its FV should be far above 2.50 .
Since she is under heavy selling pressure , dont jump in first.. unless u hv zero position in Liondiv.
William Cheng selling liondiv, liondiv selling parkson..ha ha what d hack ??
TL : CAN MR DOW TAHAN UNTIL THE NEXT DOSAGE OF STEROID INJECTION BY MR FED ?
THE NEXT FOMC MEETING WILL BE 18TH MARCH 2008.
28 Jan 2008: Corporate: Is the US Fed doing the right thing?
By Anna Taing
The surprise interest rate cut by the US Federal Reserve Board last Tuesday has drawn mixed reactions from the markets.
While some see it as a panic reaction by the US central bank to calm financial markets that have been freefalling since the start of the year, others believe that the move will go a long way to help ease the credit crunch that is hurting the world's largest economy.
Baljeet Grewal, group chief economist and head of global research at Kuwait Finance House, says the US Fed should have been more aggressive in the past to cut rates to address the credit crisis.
"It takes three to six months for the effects of monetary policy to be felt," she says.
If the intention was to improve sentiment, the US Fed succeeded. Equity markets across the globe responded by staging sharp rebounds the following day, after having plunged by between 10% and 20% the week before. Up to Jan 22, the biggest falls were seen in India, which fell 17.5%, followed by Indonesia, Hong Kong and Shanghai. All three were down 16%. Bursa Malaysia fell by a smaller quantum — it was down some 10%.
Wall Street, for one, staged a dramatic turnaround when it recovered a massive 627 points in a single day to close Wednesday at 12,270.17 points. The rebound, though, came only later in the day — the benchmark index, the Dow Jones Industrial Average — fell 300 points at the opening but managed to claw back tremendous ground by the end of the market's close.
Last Thursday, Wall Street closed 108.44 points higher at 12,378.61. At Friday's close, Bursa Malaysia managed to gain some ground to 1,405.40 points, after falling to a low of 1,354.48 points on Jan 22.
Yet, the US Fed's decision to cut the overnight Federal Fund Rate by 75 basis points to 3.5% a week before it was due to meet on Jan 29, sparked criticisms that by acting in such a hasty manner, the signal it is sending to the markets is that the problems in the US economy could be worse than what they appear to be.
Even as financial markets rallied, many see this as a temporary run—up, that is, until the next slew of bad news emerges. That's when the test will come. And it is clear that the current financial crisis, sparked by the US subprime mortgage crisis, hasn't yet run its full course.
Expectations are that as the crisis continues to unfold in the next six months or so, financial markets will remain very volatile. A clearer picture, though, may emerge in the second half of the year.
Some economists were especially not too impressed by the timing of the rate cut. Steven Roach, chief economist at Morgan Stanley, for example, opined that such a market friendly action is not the right way to run a central bank, pointing out that the US Fed could have waited a week to make the cut.
"We think the Fed could have panicked after witnessing the massive sell—off in the global markets since the beginning of 2008. However, it appears that the market is still concerned that the extra dosage is not enough to rescue the economy from falling into recession," says OSK Research.
Others agree, pointing out that cutting rates a week early will not make a big difference to the real economy although it will have a big impact on market sentiment.
The last time the US Fed had made such a massive reduction in the FFR was in 1982, 26 years ago. The FFR cut was accompanied by a similar cut in the discount rate, from 4.75% to 4%.
Rhetoric from the US Fed chairman Ben Bernanke also indicated that more cuts are in the pipeline. Indeed, the consensus view is that the Fed will cut the FFR by another 25 to 50 basis points this week when it meets on Jan 29. By end—June, the FFR may be as low as 2.50%.
A major concern is that by putting too much emphasis on the performance of the financial markets, the US policymaker is not focusing on tackling the structural problems in the US economy. Also, with inflation remaining a very real threat to the US economy, cutting interest rates too aggressively may cause inflationary pressures to build up further.
For one, by cutting rates at such a huge quantum, the worry is that it could drive the US dollar, which has already depreciated significantly against the world's major currencies, even lower. With the US a major importer of consumer goods, a weak dollar will further fan the flames of inflation.
OSK Research notes that a disorderly depreciation of the US dollar does more harm than good as it will induce imported inflation in the US economy to rise further, and also cause the prices of commodities that are denominated in the US dollar, such as crude oil, to rise further. In the long run, it says, this will also adversely impact other parts of the world.
Already, a growing view is that the US dollar is losing its status as the anchor currency for the world economy, as central banks have begun to shift their reserves into euro—based assets.
Be that as it may, the rate cut, taken at the same time with other measures that include a huge fiscal stimulus package, will help to ensure that even if the US slides into a recession, it will be short and mild.
Last week, the US administration announced a US$150 billion (about RM500 billion) fiscal stimulus package that included tax rebates and incentives, to revive a flagging economy that some research houses believe, is already in recession.
For the longer term, though, the US will have to deal with the problems it is grappling with today — the biggest of which is its twin deficits, and how it is using the savings of the rest of the world to finance domestic consumption.
KFH's Baljeet believes that while there will be more bad news in the next six months, the US economy should start improving by the second half, with the US dollar gaining back some ground.
sam , what abouit onasteel?? should we hold?/
TL : DEAD CAT REBOUNCE
MR DOW : WHO SAY SO. U SEE LAH. I DOUBLE DARE U. I UP ALMOST 200 POINTS AGAIN. U BLOW ME MEH ?
Wall Street jumps
Thu Jan 31, 2008 4:37pm
By Ellis Mnyandu
NEW YORK (Reuters) - Stocks surged on Thursday after a major bond insurer reassured investors about its stability, fueling a rebound by financial shares hammered recently by the prospect of crumbling credit markets.
Even with the day's strong advance, the S&P 500 capped its worst January performance since 1990 as crises in the credit and housing markets stirred fears the U.S. economy was at the edge of a recession. The Nasdaq had its weakest start to a year ever.
The market rallied after MBIA Inc, the No. 1 U.S. bond insurer, said it had enough cash to run its business of guaranteeing payments on corporate and municipal bonds. Standard & Poor's also told the company it had enough capital to keep its triple-A rating, MBIA executives said.
Financial shares, including Bank of America Corp, rallied on the news. A downgrade could lead to billions of dollars of more losses and write-downs related to the subprime mortgage meltdown.
MBIA shares jumped 11 percent, while those of rival Ambac Financial Group Inc, advanced 9.2 percent.
"MBIA basically came out and said the fears are overblown, they're not going bankrupt, they've got plenty of capital, they're not going to lose their 'AAA' status," said Anthony Conroy, head trader for BNY ConvergEx, an affiliate of the Bank of New York.
"That alleviated a lot of fears and you started to see bargain hunters come in, people covering some shorts," he said.
The Dow Jones industrial average shot up 207.53 points, or 1.67 percent, to 12,650.36. The Standard & Poor's 500 Index gained 22.74 points, or 1.68 percent, to 1,378.55. The Nasdaq Composite Index advanced 40.86 points, or 1.74 percent, to 2,389.86
I am wondering the reasons for William Cheng disposing of some of his shares in Liondiv. Is he disposing the shares for reasons which he know like the earnings for the coming Quarter report not going to be good? It is worrying when the big boss himself is selling off.
Fear Factor - Believe in investment gurus with proven track records or economist who are excellent with number and charts?
Sources : Reuters
Ahead of Wednesday's US Federal Reserve Bank meeting to discuss lowering interest rates, American billionaire Warren Buffett and veteran investor Jim Rogers both expressed negative sentiment about the US economy's growth prospects over the next few years.
The pressure on Fed chairman Ben Bernanke has increased in the past week as a slew of American economic data showed the economy was slowing dangerously.
A slowdown in US home sales, a decline in manufactured goods ordered and a rise in unemployment have combined with fears that the knock-on effects of the US sub-prime mortgage sector have some way to go. This has pushed the US dollar lower against most major currencies.
Mr Buffett said the fallout from the sub-prime mortgage market collapse in July and August would weigh down consumers spending habits until late 2009.
On a visit to South Korea, Mr Buffet said "buying power in the US" would be hurt as a result of the sub-prime meltdown.
He said that "overall the (US) economy will make progress" even if it took a few years to get back on track.
However Mr Rogers, who made his name and fortune from predicting the 1999 commodities rally, is more negative, telling London's Daily Telegraph the US economy was already "in recession".
"Many parts of industry are actually in a state worse than recession," Mr Rogers said.
"If it were not for Bernanke putting huge amounts of money into the market, the stock market would probably be down much more."
Most economists expect the Fed chairman to cut rates next week in a bid to boost economic activity.
Monday, 29 Oct 2007
Warren Buffett Sees " FAIRLY SIGNIFICANT " Chance U.S. Going Into Recession
Posted By:Alex Crippen
CNBC's Becky Quick traveled exclusively with Warren Buffett on a whirlwind tour of
In this excerpt from an interview with Buffett on the return flight to the United States, he talks about the probability of a near-term recession in the United States and why he's a bull on "mankind's long-term possibilities."
Warren : Well, we'll find out. Business has slowed down some, not as much you might think. Unemployment has been very good but we won't know that we've been in a recession until well after we've been in it. It could easily happen. A lot of the ingredients are there for it. I will guarantee you, you are young, in your lifetime you will see 6 or 7 recessions, probably. That is just part of capitalism. And I don't know, I don't know exactly when they will happen. I don't know how deep they will be, but they will happen and sometimes they will be exacerbated in various ways by mistakes people have made in investment markets or maybe in the housing market or something of the sort. But that is just part of a market system. And you know, if I had to pick the chances that we are going into a recession, I would say they are fairly significant, but I don't know anything that you don't know.
sam, what happen to dps, y it goes down everyday? hugh selling by d underwriter??? pls comment so that we can decide to cut loss or not...hugh losses, really 'sim' pain-loll..
dow rebound last night, is that a good sign or merely a trap so that small fish like us will gain confident n start to enter d mkt again...
GE will fall on this mth, so after d announcement, klse will fall again, n this time really hard, hit straight to d floor, flat... agree?, sam......
sam, any comment on yr trip to harbin last yr, i hav d intention to go there end of d yr (either russia or harbin), so pls advise..
TL : The good, the bad & the ugly
Save all your angpow $$ to watch " Cheong Kong No.1 " this Lunar New Year.
Good : http://online.wsj.com/article/SB120186413415635031.html?mod=hpp_us_whats_news
Bad : http://frontlinethoughts.com/article.asp?id=mwo012508
Ugly : http://frontlinethoughts.com/article.asp?id=mwo011808
Tailow.. aiyahh..posted in my previous posting about Harbin trip.. it is a beautiful city esp its ice craft festival but beware:--- cold like hell ! check what i hv posted there.
2 cmg.. already posted in my previous posting too... , make it simple here , if u trust my track records , i sell u sell, i buy u buy ^V^
Most of d time , i am not able to sell at high, 4 example , my bjcorp @0.555 n Ranhill @ 1.40+-, but some how , I managed to cabut n made some gain when stock started to come dowm from its peak . Ex Hiaptek, engtex n Ekson.
Hence , u r advice to follow my steps if u think u dont know what to do when come to bear mkt, i jump u jump ^V^
Dow rebound start enter ?still d same saying... hit n run ^V^
Today market rebound, kinda CNY feel... ^_^ Just to greet all samgangs "Happy Chinese New Year and Prosperity New Year!"
Sam & Gang....
What happened lah... No posting ?
"Sow Kung" so early meh.... ? This blog is like daily dosage of nescafe for me whatever the subject be. Keep it coming ... Cheers
Kong Xi Fa Cai to everyone here. Fatt Fatt Fatt
Forecast 2008: Recession and Recovery
January 4, 2008
By John Mauldin
It's that time of year, when I throw caution to the wind and present my annual forecast issue. Jumping to the conclusion, I think a recession has begun, so the relevant question is to ask when the recovery will begin. We will look at the housing market, the continued implosion of the credit markets, and the deteriorating employment picture. Will the Fed worry more about employment and recession or about the very real inflation pressures? Oil? Gold? Which way the dollar? I am going to make some unusual calls, as well as highlight what I think will be the next looming problem in the growing credit crisis. We'll try to cover it all in just a few pages.But first, one quick commercial note. I am looking to establish a relationship with a few venture capitalists, and/or broker-dealers who specialize in private equity placements. If such a relationship might interest you, please feel free to contact me. And now, let's jump into the letter.As is usual for the forecast issue, we begin by looking at how I did last year. All in all, not bad. I correctly predicted the housing and subprime crisis, noted that there was a potential for the credit crisis to spread (which it did), and suggested that we would end the year in recession. As I will make the case later in the letter, I think we did just that in December. I got the direction of the dollar right, as well as energy, but I was wrong (as usual) about the stock markets. I thought a recession would lead to a lower stock market for 2007. It now looks like that lower stock market will show up in 2008.And Dow-Jones columnist Jakab Spencer graciously included me in his list of analysts who got their predictions right. "Author and newsletter writer John Mauldin was particularly prescient in pointing out in plain language to his million plus readers the potential for the early rumblings in the subprime-mortgage market to upset the much larger market for securitized assets of all stripes. Before most retail investors knew what the initials 'CDO' stood for, he spelled out the dangers and urged caution."At the beginning of each year I choose a theme for the forecast issue. This year, it is "Recession and Recovery." I think we've entered a recession. As I've been writing for over a year, I think this will be a mild recession, but the recovery period will be prolonged and slow. My best guess now is that the recovery will begin in the third quarter of this year. The National Bureau of Economic Research is the final arbiter of when recessions begin and end. However, it will be at least a year and more likely 18 months before they give us a decision. By that time, we will be well on the road to recovery. So, let me make my case that we are in recession.18,000 Jobs? Not Really.The Bureau of Labor Statistics put out its monthly employment report today. The consensus forecast was for 70,000 new jobs. BLS came out with only 18,000 jobs, promptly putting the market into a funk, with the Dow falling 256 points. Since the economy needs to create about 150,000 jobs a month just to account for growth of population, today's employment numbers are quite anemic. But it's worse than the headline number would indicate.I have touched on this in earlier letters, but let's quickly revisit something called the birth-death ratio.The Bureau of Labor Statistics actually does two different surveys. One is called the payroll or establishment survey, which is comprised of calling approximately 160,000 businesses (out of 9,000,000) and seeing how many workers they have that month. They survey enough businesses to cover about 1/3 of non-farm employees. And that should be enough to get a good idea of where things are going, right? Close, but not exactly. They do not contact very many small businesses, and of course cannot call new businesses. And since small and new businesses are the engine of job growth in the US, it is important to include an estimate for them. And they do this by estimating the number of new jobs in various categories that are created or lost by means of something called the birth-death (BD) ratio. The BD ratio estimate is based upon past history. While estimating the most recent month's employment picture is quite difficult, you can do a fairly accurate job when you go back a few years, using other government data, tax information, etc. And so you can create a trend for how many jobs you miss due to the birth and death of jobs in the small business area. Now, remember, that number is an average of many years of history. As an average it is fairly accurate over long periods of time.But there is one flaw in this methodology: it will tend to underestimate new jobs when the economy is recovering from recession and overestimate them when the economy is slowing down. Thus, in 2003-4, the Democrats were beating up Bush about the jobless recovery. As it turns out, those employment numbers were massively revised upward a few years later. There was in fact a powerful recovery going on, just not in the statistics. However, nobody but a few economic geeks paid attention, as it was last year's news. This month the BD ratio created 66,000 new jobs for the establishment survey, or 48,000 more jobs than the headline number. Let's look at a table directly from the BLS web site. Does anyone seriously think that 17,000 jobs were created in the financial services world this last month? Where did that 17,000 number come from? Well, last year it was also 17,000. In fact, if you look at 2006, the numbers track very closely with 2007, which track closely with 2005, and so on. My prediction is that in a few years when the data is revised we will find that December saw a loss of jobs.And good friend Barry Ritholtz writes: "Consider: The B/D generated 1,239,000 jobs from February thru November 2007. That's rather surprising, since the total NFP jobs created sinceJanuary 2007 was 1,208,000. In other words, the Net Birth/Death jobs created over 10 months was actually greater than the total NFP jobs created in all of 2007. That's rather odd, don't you think?" Now, I mentioned that the Bureau of Labor Statistics does two surveys. The other one is the household survey, where they simply call 60,000 homes (at random) and ask how many people are in the home and who has jobs (part-time or full-time), does anyone want a job who doesn't have one, and so on. This survey covers people who are employed both by large and small employers, illegal immigrants, etc. (By the way, this is going to become increasingly suspect as more of us simply use cell phones and do not have a home phone. It will skew the survey.)These surveys tend to parallel each other, except at turning points in the economy. Then there can be some large discrepancies. As an example, take this month's household survey. There was a loss of 436,000 jobs in the household survey. Unemployment rose to 5%, up from 4.4% last February, and 4.7% last month. Writes Philippa Dunne from The Liscio Report: "Rises of that magnitude are rare; it's 1.6 standard deviations from the mean, and at the 92nd percentile of monthly changes since 1950. They're even rarer outside recessions; of the 55 rises of 0.3 point or more, just 18 have been in expansions, and most of those were either close to recessions or in jobless recoveries. In fact, the last time we saw a 0.3 point rise was in January 2001, two months before the official cycle peak. More than half the rise in unemployment came from permanent job losers."Now we know why Christmas consumer spending was so weak. And some segments of the economy were particularly hard hit. Unemployment rose to 17.1% for all youth, and 34.7% for black youth (up by 5%!!!). 6.9% of single women with children are unemployed, and are losing jobs faster than the work force at large. Part-time jobs are way up. The BLS also tracks part-time jobs of people who are doing them out of economic necessity, and that is up even more.All in all, this was an ugly labor report. Look at the graph below from Chart of the Day. (www.chartoftheday.com) A rise of 0.5% unemployment (from the bottom) has always been associated with a recession. We are already up 0.6%. It is hard to imagine how it will not be so this time. So, how did we get here? As I have written for a long time, it is the result of the bursting of the twin bubbles of the housing market and the credit markets. This process is going to take a long time, and create major headwinds for the economic recovery. Let's look briefly at each one, although I will go into more detail in later letters.Housing: Going Down, Down, DownLet's look at two charts from Gary Shilling's latest letter. They pretty much say it all: Notice that the inventory of new homes is continuing to rise. Also, that new home sales have not fallen to the level of 1991. There is still significant potential downside for new home sales. Separate work by Shilling suggests that some 2,000,000 excess homes have been built over the past decade. These have been bought by speculators and people who we are now discovering they cannot afford to make the payments on the homes. Low rates, rising prices, and reckless lending standards spurred an irrational rush into housing speculation, and sent the wrong signals to builders, who responded by overbuilding.New home construction is still way too high given the inventory levels, and will fall further. It is way too early to call a bottom of the housing market, or a recovery of home builders. Now let's look at the next chart: Shilling projects housing prices to drop by about 25%. Some will counter that Gary is way too bearish, but Bank of America estimates are not far from that. Professor Robert Shiller of Yale, who created the S&P Case/Shiller index which tracks housing prices, recently suggested in a Times Online article that homeowners have lost about $1 trillion and could lose three times that much over the next few years. That is consistent with a 20-25% drop in home prices.And remember, that is a national average. Some areas in California, Nevada, and Florida where speculation was particularly rampant could see drops of up to 50%. Writes Shilling: "And there's lots more to go. As noted earlier, it would take a 24% decline in prices to re-establish the normal relationship with building costs. A 27% fall is required to bring house prices back in line with rents. And a 50% drop is needed to return to norm when house prices are adjusted for overall inflation and their growing size." Ouch.One last chart from Gary to illustrate the problem. Vacant properties are at an all-time high. Speculators who bought homes to flip are now in a cash crunch. They can either rent at a loss, or see their homes foreclosed. This is going to create a real oversupply of homes for at least several years. As I have made the case for over a year, the negative wealth affect from falling home prices is going to put a damper on consumer spending. The reduced ability to borrow money on homes is going to put a crimp in consumer spending. Higher unemployment from fewer construction, mortgage, and housing-related industry jobs will negatively affect spending.This is going to be a problem until at least the middle of 2009, as it will take that long to work through inventories and foreclosures. That is one of the reasons why I think the recovery will be slower than it normally would be. But now let's turn to the second bubble, and a brewing problem that could mean a further round of massive bank write-offs.Who's Got My Credit Default Swap Back?My middle son is an online gamer, typically playing combat games with teams formed by players from around the world. To advance in the rankings, you have to work together. "I've got your back" is a frequently heard term in my house. If no one has your back in the gaming world, you can be pretty sure that the enemy will soon be there and you will be a statistic.The "back" for the mortgage investment business seems to be particularly absent. As in the online gaming world, it could get ugly really quick. And a lot uglier than I thought just a few weeks ago.In a brilliant article in the Wall Street Journal, Carrick Mollenkamp and Serena Ng detailed the rise and fall of a collateral debt obligation (CDO) called Norma, ushered into existence by Merrill Lynch. This is a $1.5 billion CDO created in March of 2007 with over 90% of its paper rating "A" or better, and $1.125 billion rated AAA. In November 2007, the entire CDO was downgraded to junk.That is not particularly news, as there are a lot of subprime CDOs that are being downgraded. What caught my eye was how this CDO was created. Quoting (and emphasis mine):"For Norma, [the manager] assembled $1.5 billion in investments. Most were not actual securities, but derivatives linked to triple-B-rated mortgage securities. Called credit default swaps, these derivatives worked like insurance policies on subprime residential mortgage-backed securities or on the CDOs that held them. Norma, acting as the insurer, would receive a regular premium payment, which it would pass on to its investors. The buyer protection, which was initially Merrill Lynch, would receive payouts from Norma if the insured securities were hurt by losses. It is unclear whether Merrill retained the insurance, or resold it to other investors who were hedging their subprime exposure or betting on a meltdown."Many investment banks favored CDOs that contain these credit default swaps, because they didn't require the purchase of securities, a process that typically took months. With credit default swaps, a billion-dollar CDO could be assembled in weeks."UBS Investment Research estimates that CEOs sold credit protection on around three times the actual face value off triple-B-rated subprime bonds. 'The use of derivatives "multiplied the risk," says Greg Medcraft, chairman of the American Securitization Forum, an industry association. 'The subprime mortgage crisis is far greater in terms of potential losses than anyone expected, because it's not just physical loans that are defaulting.'"The article goes on to detail how the entire CDO world is one large daisy chain of credit default swaps. Who's got your back? And who's got the back of the guy who has your back? And .... you better hope it is not ACA.Never heard of the company? You will. ACA has dropped 95%, from $16.55 to $0.86 today. Why? Because the company sold credit insurance on CDOs. "If now junk rated ACA can't come up with an additional $1.7 billion in capital by January 18, it will be insolvent and the $69 billion in credit default swaps on CDOs it underwrote will be worthless." (Shilling) $69 billion? That is huge. Think that won't hurt balance sheets all over the world?Counterparty Risk is the Real Sleeper IssueThere is never just one cockroach. Write this down. Counterparty risk in the credit default swap market will be a huge story in 2008. Losses are going to mount far higher than estimates from just a few months ago. I believe that many financial institutions will be taking large losses every quarter for the next few quarters. At the end of each quarter, investors will hope that this is finally the end. "Surely this time they have gotten it all out in the open." It won't be, because banks can't write down loans until the counterparty risk problem is solved. Who's got your back?Between more massive subprime-related losses, being forced to bring SIVs back onto their balance sheets, and deteriorating credit quality in other bank lines (like credit cards and auto loans, as well as commercial real estate), banks are going to be forced to raise capital and tighten lending standards. This is not something that is going to happen in one quarter. It may take the better part of the year for all of this to flush out of the system.This tightening stance will also contribute to a slower than usual recovery. Even if the Fed cuts rates again and again, the banks still have to raise capital and become more prudent lenders. And that means the cost of borrowing is going up.The Fed: Too Little, Too LateThere are those who hope that the Fed will ride to the rescue with more rate cuts. I believe they will, but it is a case of "too little, too late." I think we will see a Fed rate below 3% by the end of the summer, if not before. But they are likely to initially take it slow, until it is clear we are in a recession, and/or inflation pressures have abated.While rate cuts will help in general, the problem is that rate cuts won't help the credit crisis, won't solve the problem of credit default swaps, and won't bring back the subprime market. These are problems we simply have to work our way through, and it is going to take time.Investment banks and the financial services industry made a great deal of money on securitizing all manner of risk. In general, that is a very good thing, except when the risk is fraudulent subprime mortgages. That source of income is drying up. You can bet the banks are working overtime on creating new forms of securitization that will allow for transparency and increased investor protection. There is a market for risk properly packaged and understood. Profits at investment banks are going to be under pressure until these new structures are developed and accepted by the marketplace. They have the incentive to get this done quickly and done right.So let's get to the predictions. I think that we are in a recession for most of the first half of this year, and that we begin a slow recovery in the second half. It will be a Muddle Through Economy for at least another year after that. That would suggest that most companies will come under serious earnings pressure. If history is any indicator, that means we should see a bear market in the first half of this year. How deep will depend on how fast the Fed cuts, but I don't think we are looking at anything close to the bear market of 2000-2001. Still, I wouldn't want to stand in front of a bear market train.Consumer spending is going to slow, and it will be slower to rebound, for reasons outlined above. That will also make the recovery in the stock market a little slower. But I expect to become bullish on the market sometime this summer, if not before. I'm looking forward to it.It also follows that bonds are a good buy at this point. It would not surprise me to see the 10-year bond fall to 3.5%.I think the United Kingdom follows the United States into a mild recession, and European growth will come under pressure. Nearly every central bank in the developed world outside of Japan will be cutting rates by the beginning of summer. China will not have a hard landing this year.I've been bearish on the dollar since early 2002. Sometime in the first half of this year I think we see the dollar bottom out against the euro and the British pound. When the Bank of England and the ECB start cutting their rates, the dollar will start rising. The US will recover faster than its European counterparts, and that will help drive the dollar higher. The dollar is massively undervalued against those currencies. I think the dollar ends up higher by the end of the year, maybe by 10% or more. As I have written before, I expect the dollar to be at $1.20 against the euro once again, and sometime next decade it will be at parity.But not against Asian currencies. I expect the dollar to continue to drop against the Chinese yuan, the Japanese yen, and other major Asian currencies.This will be a challenge to gold, and we could be in a period of price consolidation for the yellow metal. But at current prices, gold stocks are attractive.There will still be significant growth in emerging markets, which will therefore increase demand for oil and energy, offsetting potentially weaker demand in the developed world. Six months from now energy inflation will begin to subside, if only because the year-over-year comparisons become easier. I believe oil is going higher, but maybe not this year, barring a crisis of some type. I am still a believer in natural resource stocks and alternative energy for the long run.Europe, Santa Barbara, China, and The Motley FoolI will be traveling to Europe the third week of January. I will be in Geneva on Monday the 21st, Zurich on Tuesday, Barcelona on Wednesday, and in London on Thursday and Friday, coming back Saturday. We do have time in the schedule for additional meetings. My European partners at Absolute Return Partners in London are taking care of my schedule, and I'll be glad to put you in touch with them.When I get back from Europe, Tiffani and I will be going to Santa Barbara to meet with Jon Sundt and the partners at Altegris Investments for our annual planning meetings. This year we're going to go to Jon's ranch house in the coastal mountains. It is a beautiful place, and I'm looking forward to our time together, and also to raiding his wine cellar.I don't often do this, but I have been reading South African partner Dr. Prieur du Plessis's blog for a while, and for those of you who want timely market comments, you should consider subscribing. It is free, but I find it valuable. You can go to:http://www.investmentpostcards.com. I mentioned a few weeks ago that I had been nominated for Investor of the Year by the Motley Fool. Well, the online votes are in. From their web site: "You saw this one coming, right? Buffett wins again, with 41% of the vote, in another 2-to-1 margin of victory. The surprise runner-up here: John Mauldin - advisor to the hedge-fund stars, president of Millennium Wave Advisors, and author of the Thoughts From the Frontline weekly newsletter. What makes Mauldin a worthy second to the Oracle of Omaha? Read his May 2006 interview with the Fool (parts one, two, and three) and find out." I am going to do another interview next week and will give you a link when it is up.And no, I am not going to China. Not yet anyway. But a few weeks ago my Chinese-language version of this letter topped 2000 subscribers. I started this letter, seven years ago, with 2000 subscribers. We'll see if lightning can strike twice. You can subscribe to the Chinese version at www.frontlinethoughts.cn.
TL, what a lengthy letter. ^_^
But really making sense. Believe more write down are to be disclosed by major bankers in the coming qtrs.
Ben ,
Seemed like ecm din move even on the annoucement of buy back 10%. have you sell it? i still had in my hand coz my enter price are high @ 0.95. What your strategy ben?
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