AAR & TOL 02 (Nov 08 - Jul 09)

[winston]

What are some of the reasons for inactivity ie not taking any position ie staying in cash?

I like to always have at least 30% cash at all times, in case a good opportunity that comes along..

At this point in time, I'm mostly in cash becuz I cant see where things are heading ..

[kennynah]

with $3...i struggle to be in cash....wahahahaha...

[winston]

TOL:-

The bulls remembered how they missed the rally, the doubling and tripling of some stocks, in just 3 months.

The bears remembered the steep fall last year and think that the rise was too fast, too soon.

Who will win this tug of war ? What should I monitor ?
1) Analyst reports ? ( there are always a leading contrarian indicator )
2) Foreign currency flow into the HK$ ?
3) The number of bulls vs bears on CNBC ?
4) My own emotions and bet against that ?
5) The emotions of the people around me and bet against them ?

The trend is your friend for the very short term but in the mid-term, it always pay to bet against the trend. So how long is mid-term then ? 3 years ?

[winston]

TOL:-

When Oil was jumping everyday at close to US$150, what were your emotions at that time ? What did you do ? Did you chase or did you sell ?

When the market was crashing in March 2009, what were your emotions at that time ? What did you do ? Did you sell or buy ?

What did you learn from the two episodes ? Can you trust the crowd ? Can you trust the guys on CNBC eg. Roubini, Soros, Buffett, Stephen Roach etc. ? Can you trust the Analysts ? Can you trust yourself ?

[winston]

TOL:-

It has been mentioned a couple of times that there's about US$8t of cash on the sidelines.

Does anybody know what was the cash level last Oct 2008 ? And Oct 2007 ?

[winston]

TOL:-

Headlines on CNBC:- Asian stocks up on CIT Rescue Plan

Are you buying shares just because a US company is not going into bankruptcy ?

Were you afraid of systemic risk eg. GE Capital may also go bankrupt ?

Do you know why you are buying or selling ?

[winston]

TOL:-

Markets have been rallying like no tomorrow.

Where's the money coming from ?
1) Cash from sidelines going into Equities ?
2) Emerging Market ETFs ? And where did those money come from ?
3) Short-covering ?
4) Money being allocated from Bonds ?
5) Margin trading, as interest rate is close to zero ?
6) Traders leveraging on their bets again ?

In China, the money probably came from the increase in bank loans to the connected companies, who then ploughed the money into the stock-market. Is that sustainable ?

[kennynah]

borrow heng heng's words...

buay ki jiu loh, buay loh jiu ki

[winston]

TOL:-

Whenever there's a correction, the parrots would say that it's healthy. The reasoning is that if it becomes too hot, it will crash one way.

So have you seen something that crash one way only? Well, Black Monday was 25% in one day. But other than Black Monday, they are all healthy corrections ( oxy-moron if you are long )

And how does the parrots know that it's a healthy correction ? Aren't they assuming that the market will rise after the correction ?

To me, a correction is either a buying opportunity or a warning sign . I will consult my magic book later