AAR & TOL 01 (May 08 - Oct 08)

[littlecupid]

TOL:-

Similarity to the Asian Financial Crisis ?

Part 1
1a) Markets dropped for 1.5 years, from 1997 to mid 1998
1b) Markets have now dropped for a year already, since Oct 2007

Part 2
1a) In mid 1998, things looked very bleak going forward
1b) In Sep 2008, things also look very bleak going forward

similar but the stock market slide's magnitude is very much different....US market decline is still chicken feed

[millionairemind]

US decline is chicken feed cos' they have Hank and the FED who are both determined that they can LEGISLATE a bottom for the stock market...

What happens if they can't and the market keeps sliding?? Will they set up a fund to buy and support the market like HK did back in 98? Will they do a TOTAL BAN on short selling, short of explicitly telling the investors that our market can only go up.. it cannot come down??

Funny how when Nasdaq crashed from 5000 to 1300, they were not so active behind the scenes to manipulate the market...maybe the severity this time round is REALLY REALLY BAD...

[winston]

TOL:-

Similarity to the Asian Financial Crisis ?

Part 1
a) Markets dropped for 1.5 years, from 1997 to mid 1998
b) Markets have dropped now for a year already, since Oct 2007

Part 2
a) In mid 1998, things looked very bleak going forward
b) In Sep 2008, things also look very bleak going forward

Part 3
a) Although things looked very bleak in mid 1998, there was a sharp rebound in the markets. The markets tend trended upwards from mid 1998 to 2000, much beyond the expectation of most people because things looked so bleak in mid 1998
b) Things certainly looked very bleak in Sep 2008 looking forward

Part 4
a) The market tend trended downwards for two years from 2000 to 2002
b) I can see the market going down after the sharp rebound this round

Questions:-
1) How long would this rebound be ?
2) Will it be sharper and longer than expectation ?
3) If the inexperienced shorts have not covered, when would they be covering ? When would the pain become so unbearable that they would have to cover ?
4) The rational thinking now is that this rally is a temporary bear market rally. What happens if it is not ? In mid 1998, everybody thought that it was also a temporary bear market rally as things looked so bleak going forward in mid 1998.
5) Is this time different ?

[littlecupid]

hehe....my thoughts... the only way market can go up if it goes down further.....
ie.. a yoyo...if you stop the downward motion of a yoyo halfway, it stops momentarily...and it gather speed downwards again....

I think this bear rally has some way to go...lets see

[fclim]

hi w,

are we at the end of it all? i dun think so leh, maybe Wall Streets will feel better now... but hor, i think the Main Street will kena chia lat chia lat...

http://finance.yahoo.com/banking-budgeting/article/105794/Pain-Spreads-as-Credit-Vise-Grows-Tighter

also hor, i think the credit default swap thingy not yet played out... maybe Wall Street will catch a serious cold again... if and when things start falling apart for the CDS market? what do you think of the CDS market leh?

have fun (at least try lar),
fc

[winston]

are we at the end of it all? i dun think so leh, maybe Wall Streets will feel better now... but hor, i think the Main Street will kena chia lat chia lat...

Hi fc,

I dont know. In mid 1998, thigs were very bleak as well but the market went up for the next 1.5 years. Main Street was also very bad at that time in mid 1998 and things also looked very bleak going forward ...

This round, I'm seeing the same thing. Every Uncle & Auntie already know about Subprime, Credit Crunch, Credit Card defaults etc..

Dont forget that the rules have now changed. The rules on Short Selling have been changed and they have put in a lot of liquidity into the system..

Anyway, I invest mostly in HK and I'm betting that HK will now track Shanghai more closely than the US. Also the Chinese government are now supporting the market. Please read my TOL in the HK & China Strategy.

Take care,
Winston

[winston]

TOL:-

" Time in Market" vs "Timing the Market"

Do you remember those studies that says that if you miss the top 10 days of the year, your returns would dropped significantly ? You have just witnessed this happening the past few days ...

And if you have been in cash while the market was trending downwards, give yourself a pat on the back as well

[fclim]

Hi w,

thanks for your sharing... you definitely have a chance to be right in your judgement...
the wall st and main st are very much different and the most impt thing is to HUAT!

nevertheless, when i read abt CDS (market of $57.9 trillion), it strikes fear into me..
really sends a chill down my spine... hopefully, things are not as bad as they make it out to be...

have fun,
fc

[millionairemind]

TOL:-

" Time in Market" vs "Timing the Market"

Do you remember those studies that says that if you miss the top 10 days of the year, your returns would dropped significantly ? You have just witnessed this happening the past few days ...

And if you have been in cash while the market was trending downwards, give yourself a pat on the back as well

Like this??

This one is for all our active forummers and readers..

[winston]

TOL:-

1) The bad news will persist for a while..

2) Oil has corrected and rebounded. I think it will stabilize from here. No big movement either way.. I think

3) Gold is still strong. I think that it will trend downwards. I'll not be buying any gold stocks or any Gold ETF for the time being.

4) I think the USD will continue to rise against the Euro

5) I think there is a lot of people waiting on the sidelines to jump into commodities.

6) I expect China to start stock-piling Commodities, taking advantage of the strong US$ and low Commodity prices.

7) US Equities - I think the US$700b will be passed somehow. Even if it is delayed, it will not be the end of the world. Don't forget that short-selling is no longer allowed on the financial stocks. Will next week be the "mother of all rallies ?"

8) Shanghai - With the government supporting the market, the SSE should continue to go up in the short term. The government will also be allowing margins trading & short-selling very soon. When the next sharp correction occurs, the government will then announce the RMB 400b fiscal & tax package, that they've put together. They are still keeping this up their sleeves. In the meantime, all the SOEs are buying back their shares. Am waiting for the right time to add to A50Chinatracker 2823 and WiseCSI300 2827 over the next week when the SSE is close..

9) HK - If HK drops a lot, the HK regulators will announce a ban in short-selling as the precedence has already been set. Next week, HK will be getting it's direction from the US as the SSE will be close for a week. Am thinking of buying a call now.

10) Spore - Am not excited about anything here..

11) Taiwan has corrected. Will follow US but I'm also worried about the slowdown in Taiwanese tech exports to the US. A floor could have been set already with the ban on short-selling. They have also been using their Stabilization Fund.

12) Missed the boat on Russia. Will wait for the next opportunity to buy Russia.

13) Am watching Korea as well. Again, I'm also worried about the slowdown of Korean exports to the US. I also want to see the bottom of the Korean Won first.

The above are to help me crystalize my thinking. Please do feel free to comment on the above. I would like to also hear your kind thoughts and comments.