Winston's Investment Ideas 03 (Jul 12 - Sep 15)

Re: Winston's Investment Ideas 03 (Jul 12 - Dec 15)

Postby winston » Sun Sep 27, 2015 7:35 am

TOL as of Sep 27, 2015

volatility.jpg


Volatility

It has been quite volatile in the markets lately. So where do we go from here ?

1. For the US market, we have 3 more days for 3Q Window Dressing. Thereafter, there should be one spike in early October, from the new money from the new month of October. After that, I think that Quarterly Earnings would be quite weak. Anyway, I still have some Inverse ETFs on the S&P and would probably add to those positions in the 2nd week of October. Currently, I'm not expecting a sudden crash in the US but a slow decline over the next few months.

2. For the Shanghai market, it's around the support of 3,000 and the Chinese government would probably continue to support it. In addition, about 60% of the margin debts have been covered already. Therefore, I will probably continue to add to my A50 ETF.

3. For HK, I think that it's a buying opportunity. It has dropped quite a lot and is now close to the support of 20,500. The only thing that could spoil the party in HK would be a sharp crash in the US, which I'm not expecting at this point in time.

4. For my Emerging Market Currencies ( SGD, MYR, AUD ), I'm still struggling with what to do with them.
a. As Yellen didnt increase rates, is there now a window of a few weeks to take action before they crash?
b. I think that the SGD is quite overvalued and I should convert some of my SGD into the AUD or MYR
c. The AUD has now recovered against the MYR but I will probably not convert them to the MYR, due to the poor sentiment in Malaysia
d. Imported goods in the EMs would probably now rise in price so it may be a good time to buy any imported big ticket item
e. China would probably continue to devalue the Yuan, especially after President Xi's trip to the US
f. HK may also devalue the HKD later, as it's getting expensive for them to maintain the current peg
g. The Euro is surprisingly strong, probably due to the Carry-Trades ie. traders borrowing in EUR to speculate
h. The GBP is also quite strong, probably due to money being parked in that safe haven

I have been reminding myself to increase my Cash position but have not been too successful. There's just too many perceived "bargains" out there.

I have to continuosly remind myself that "cheap can become cheaper" and it's better to be more conservative at this point in time.


Commodities:- - Risk-Off

1. Oil - Flat. US$45 from US$45 from US$45
a. Global Oil Production vs Demand: 96.5m bpd vs 94m bpd
b. Global Stockpiles: 4.1b barrels ( 43 days if no more global production )
c. Global Government Stockpile: 1.4b barrels
d. US Oil Production vs Demand: 19.55m bpd vs 20m bpd
e. US Strategic Petroleum Reserve: 690m barrels out of max 727m barrels
f. US Private Industry Reserves: 485m barrels
g. US Oil inventories: The US glut continues to ease, although at a very slow rate.
h. Iran will be able to supply 1m bpd; It also has 40m barrels in storage
i. US Oil Capex: US$1t
I will continue to stay away from Oil Services companies as I dont think that this will a "V" recovery,

2. Gold - Higher. US$1146 from US$1139 from US$1108. Record US$1920. Vested.

3. Platinum - Lower. US$947 from US$982 from US$972

4. Silver - Flat. US$15.10 from US$15.15 from US$14.58. Range High: 49

5. Copper - Lower. US$2.28 from US$2.38 from US$2.45

6. Monitoring Commodities. It's cheap, hated, cheap but not on uptrend yet.


Equities - Risk-Off

1. US Equities - Lower. 1931 from 1958 from 1961. No Trade

2. HK Equities - Lower. 21186 from 21920 from 21504. Bought Cinda, CGN, Avi China, Great Wall Motors, CCC, BBMG, Wasion, Shimao, Huabao, CK Properties, CRRC, Legend and Conch Ventures. Traded Nirvana

3. Shanghai Equities - Lower. 3092 from 3098 from 3200; Bought A50 2822

4. Spore Equities - Lower. 2833 from 2880 from 2888. No Trade

5. Japan Equities - Lower. 17881 from 18070 from 18264. No Trade
,
6. Malaysian Equities - Lower. 1615 from 1669 from 1604. Bought MAA. Sold Magnum and Datasonic.

7. Warrants - Traded 61214, 69106 and 67328 in HK


Currencies- Risk-Off

1. USD to JPY - JPY Weaker. 121 from 120 from 121. The 52 week range is 76 to 126

2. SGD to MYR - MYR Weaker. 3.08 from 3.02 from 3.05

3. AUD to USD - AUD Weaker. 0.70 from 0.72 from 0.71

4. AUD to SGD - AUD Weaker. 1.00 from 1.01 from 1.00. The 52 week range is 0.99 to 1.36. Am thinking of swapping my SGD for AUD.

5. AUD to MYR - AUD Stronger. 3.09 from 3.04 from 3.05. Am thinking of converting my AUD to MYR

6. EUR to USD - EUR Weaker. 1.12 from 1.13 from 1.13. Not vested in EUR

7. USD to HKD - HKD Weaker. 7.7532 from 7.7501 from 7.7521. 52 week range is 7.7497 - 7.7677. Vested in both HKD and USD. Will they be re-pegging the HKD at a lower rate to the USD ?

8. Dollar Index - USD Stronger. 96.26 from 95.15 from 95.18


Others

1. Sentiment - Anxiety to Denial ?

2. Headwinds - Demographics, China Debts (US$5t); Chinese Local Government Debts (US$3t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Plunging Commodities; Chinese Stocks Margin (300%; RMB 4t); Emerging Markets US Loans (US$6t); China's Corporate Debt (US$16t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, Presidential Cycle; Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t)

4. Risk Management -
a. Global diversification
b. Asset Class diversification
c. Diversity of industry & company exposure
d. Currency hedging
e. Tactical asset allocation
f . Inverse ETFs and Put Warrants

5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - Downpayment for 2nd Home reduced to 20% from 30%; Rules relaxed for foreigners
d. HK - Buyers focusing on tiny new flats due to steep discounts, financing to 95% and potential yield of about 3.8%.

6. Yield on 10 Year US Treasuries - Higher. 2.16% from 2.13% from 2.19%. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. Norway reduced rates by 25 bps to 0.75%
c. Taiwan reduced rates by 12.5 bps to 1.75%
d. I'm still expecting interest rates to remain low for quite a while more


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

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