Winston's Investment Ideas 01 (Nov 08 - Apr 10)

[kennynah]

good observation

[winston]

TOL as of November 28, 2009:-


Be Patient! Wait for the stars to line up first..

I was actually going to skip this week's comment but decided to think about things after what has happened in Dubai.


1) Gold - I think it's over-bought and due for a correction. It's not the end of the world. The Chinese housewives are not buying gold despite what you read in some of the American newsletters. Central Bankers are also not seen as good traders. If the USD spike upwards, Gold will be hit further.

2) Oil - Am expecting it to drop further. Inventories are high and if the USD spike upwards, Oil will drop further. Israel will probably not attack Iran so soon. However, a sanction on Iran could lead to an intial spike as Iran has threatened to close off the Strait of Hormuz but I dont think the sanction will happen so soon.

3) Other Commodities - Expecting the USD to spike upwards. Hence, Commodities will also be hit. I'm also picking up some news that China will be buying more Commodities domestically. to support the domestic producers.

4) Shanghai Equities - Now at 3096. Expecting it to trend downwards. Support: at around 2950; 2900; 2750 and 2675. SSE does not look that strong to me.

5) HK Equities - Positions in Zhongwang, AMVIG, BBMG. Sold Rexlot. The 1000 points drop yesterday on 1.5 times the average turnover was a wake-up call. People have been complacent for along time and have been buying on dips. In addition, HK also does not have a lot of retail investors ( relative to the size of the stock market ), to support the market should a crash really occur.

6) HK IPO - Stagged on Fantasia, Sany & Ming Sheng. Applied for Sands. Did not apply for China Forestry and Futong, Need to be a bit careful in case there's a crash.

7) Spore Equities - Initiated a small position in Starhill to follow their story

8) US Equities - Expecting it to be range-bound. Am still sitting on my S&P Inverse ETF

9) Japan Equities - Noticed that they have corrected quite a bit. Expecting the strong Yen to correct so it could be good for Japanese Equities.

10) Vietnam Equities - Dropped a lot. But interest rates is at 8% while inflation is at 7%. GDP growth is at 5%. The recent 5.4% depreciation on the Dong is also a concern. Watching 3087 DBX FTSE Vietnam fund that is listed in HK. It will be a long watch ..

11) Properties ( HK,Spore & China) - Would confidence be affected by the Dubai affair? However, the reason for reduced demand, could be that they have tightened loan requirements in China and the leakages have slowed down.

12) Swine Flu - Have not heard of any significant increase in cases. News blackout ?

13) Emerging Markets - How big is the out-flow ?

14) Iran - Expecting sanctions later to appease Israel as the world does not want war. But I dont think it will happen so soon, so Oil should continue to drift downwards.

15) Hedge Funds - Next deadline for redemption is Feb 15, 2010 for Apr 1, 2010

16) Mutual Funds - How big is the out-flow ?

17) US Interest Rates - Would need to rise if the USD continues to drop. Would you be buying a US debt now, at a very low interest rate with a depreciating dollar ?

18) USD - Is Dubai strong enough a catalyst, to force the shorts to cover ? If not, what else is a stronger catalyst ? Crash in the Yen ? Crash in Eastern Europe ? Crash in Emerging Markets ?

19) Signature - I heard Dennis Gartman on CNBC and have changed my signature

20) Title - Today's title is to remind myself to be patient and to wait for things to unfold first. There are a lot of nervous traders out there.

21) Crash - A crash normally happens during euphoria and from a strong catalyst. It will initially bring the market down sharply. Thereafter, the skeptics will buy and cause a rebound. After that, the guys who did not have a chance to get out, will sell into the rebound. This is the typical "M" that you see on the charts.

The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above at your own risk. Please do also feel free to provide me with your kind thoughts and comments.

[kennynah]

8) US Equities - Expecting it to be range-bound. Am still sitting on my S&P Inverse ETF

i'm curious W... if you are expecting US market to be ranged bound, then why do you initiate S&P Inverse ETF position and then maintain it?

18) USD - Is Dubai strong enough a catalyst, to force the shorts to cover ? If not, what else is a stronger catalyst ? Crash in the Yen ? Crash in Eastern Europe ? Crash in Emerging Markets ?

The Dubai debacle is a wakeup call on the misplaced over-confidence that countries will not default on their external debts... it is a reminder that USA who is indebted to the world some 3trillion dollars that it could one day behave just like Dubai..even though we all think this is only a very remote possibility... the market reacted and begin pricing in that into the dollar and overall prices of equities..

the dollar inverse relationship to the equities market is not to be taken to be a norm...i don't think this relationship will not last for too long further...one day, when people no longer short the dollar to hedge their US assets, that relationship will break apart..and it could be soon...

[winston]

8) US Equities - Expecting it to be range-bound. Am still sitting on my S&P Inverse ETF

i'm curious W... if you are expecting US market to be ranged bound, then why do you initiate S&P Inverse ETF position and then maintain it?

Ha Ha ... the range is between 8150 to 10,400 and we are closer to 10,400 then 8150.

[kennynah]

therefore, your position actually reflects your bias for the downside?

[winston]

therefore, your position actually reflects your bias for the downside?

Intuitively, I think the market should trend downwards but will not crash.

Although I have some US Inverse ETF, I'm still long the markets as I still have some long positions in HK and Singapore.

But on a portfolio basis, I'm really in Cash and waiting for things to unfold.

[winston]

Just changed my Signature today.

It's from a good article on the US Recovery, which I have filed in the "US Recession - How Deep & Long ?" thread.

If you think that the US is on it's way to recovery, you may want to read the signature again ie. "Where's the extraordinary evidence ?" ..

[winston]

Received a PM asking me why I'm long and short the market at the same time which is quite inconsistent to that reader ....

My reply is that we should look at the Investment Horizon for a particular investment.

For some of my Equities, I have a very long horizon. Therefore, I'm willing to hold on to them unless I think that there's a very major crash, which I dont see at this point in time.

For those Equities with a shorter time horizon ( weeks ), I have already pared down my exposure. For these Equities, I trade them in and out, week after week. Under the current scenario, I dont think the rewards are worth the risk now.

Going forward, the only Equities that I will probably buy would be those that have a very strong catalyst that can go against Market Direction in a downdraft..

At this point, I have a big chunk of my portfolio in Cash, waiting for things to unfold...

I hoped that the above is clearer. Please do feel free to comment.

[Musicwhiz]

Well, to each his own.

What I do feel strongly about, though, is that people should start forming their own investment philosophies and views on the market instead of relying on others' opinions. It's like relying on someone else to manage your money and wealth! I would never want that for myself.

[kennynah]

MW : agree...

i suppose it is good to stay open-minded about others' views of the market situation... sometimes helps us to bring to attention some missing details...