Investment Strategies 01 (Nov 08 - May 10)

[winston]

TOL:-

Is the money in the corner already, waiting to be picked up ?

Jim Rogers: markets tend to overshoot on both the upside and downside

[Aspellian]

cannot sense any panic ALL around. all seems calm and rosy.

[kennynah]

If one had been shorting, its best to cover today. You don't know what's going to happen over the weekend... maybe Ben decided to loan Greece $200B, saying that its profit from the TARP rescue

Its been a long time since I last saw a 1000 point decline on the HSI...

Probably about time liao...

i'm with you on this....i am flat as of last night...it's a fri and it's not worth the risk to hold not just o/n but o/w positions especially during this crisis period... and dont go away thinking keeping Short position will be ok... cos, when things recover from a deep drop...the bounce can be just as merciless...


enjoy your pre-weekend...i know i will....hahaha

[LenaHuat]

History indicates that SSE seems to live in a world of its own, having little effect on HSI and vice versa. Going forward, it might no longer be so. IMHO both the HSI and SSE are in for a pretty long period of correction. That's why I posted the historical chart abt HSI in another thread and thought it might be good to step back and re-look at the HSI.

[winston]

How to Know Which Sectors Will Go Up Next By Dr. Steve Sjuggerud
Friday, May 7, 2010

When it comes to stocks, what's going up keeps going up.

You won't believe it… but it's true: Specifically, going back to the 1920s, if you'd simply invested in the sectors that were already going up, you'd have beaten "buy and hold." That's one of the basic conclusions of a recent academic paper by my friend Mebane Faber of Cambria Investments.

This is something we've done for years in my True Wealth newsletter… Our ideal investment has three characteristics: It's cheap, hated, and it's in an uptrend. It turns out, the uptrend is an incredibly useful indicator.

Meb tested a simple system of buying what's in an uptrend – what's already done well. He presented his results last week at our private conference on Maryland's Eastern Shore… He found that buying what's been going up outperformed "buy and hold" in "approximately 70% of all years, and returns are persistent over time."

Now, most investors believe this is foolishness… They don't believe you can simply buy what was already up and expect to make money. Most investors believe you have to deeply study an investment to determine if it's an undiscovered value before you buy it.

Me? All I care about is what works…

Prove to me that it works historically… and prove to me that the outperformance persisted in different timeframes… then I'm interested. And that's what Meb did.

Meb kindly kept it simple, too. He said he wanted to deliver "some simple methods that an everyday investor can use."

Meb tested 10 sectors going back to 1926. If you'd bought the sector with the best trailing 12-month performance, held it for one month, and then reevaluated after one month, your compound annual gain would have been more than 16% a year – beating the stock market's 10% compound annual gain.

Of course, a one-sector portfolio is risky. You can spread your risk out more…

If you'd bought the top two best-performing sectors over the last 12 months, and then rebalanced a month later, your risk would fall and your return would be 15% a year. You'd still have dramatically outperformed buy and hold.

If you'd bought the three best-performing sectors over the previous 12 months, once again your risk would fall significantly. Your return would be 14% a year: still way better than the market.

When I say 16% (or 15% or 14%) a year, it might not sound like much outperformance… but it is. At 10% a year, it takes more than seven years to double your money. But at 16% a year, it takes roughly four and a half years. When you start compounding that over decades, the outperformance becomes huge.

It's easy to set aside a bit of money to trade a system like this one. You can simply buy no-load mutual funds or ETFs, which keep your costs low.

In short, today's lesson is – when it comes to sectors of the stock market – what just went up tends to goes up.

This idea goes against conventional thinking, but it works. I like that…


Source: Daily Wealth

[Aspellian]

History indicates that SSE seems to live in a world of its own, having little effect on HSI and vice versa. Going forward, it might no longer be so. IMHO both the HSI and SSE are in for a pretty long period of correction. That's why I posted the historical chart abt HSI in another thread and thought it might be good to step back and re-look at the HSI.

Hi Lena Jie,

Why do you say HSI and SSE are in for a long correction? Is it because of the recent slowdown of CHina growth as a result of government intervention? Or you see something more fundamental happening? eg. property bubble bursts?

[kennynah]

nobody is asking me here...so i kapoh...

i think the correction is over by next week...

[winston]

i think the correction is over by next week...

Hmm... is that an investable idea ?

1) Buy a call and sell on the technical rebound?
2) Short the technical rebound ?
3) Sell into the technical rebound and raise cash ?
4) Go Long for the Medium Term ?

And what if one is wrong ?

[kennynah]

simply Long the indexes...but becos this is a trade... keep those stop loss orders tight enough....just in case, the market opinion is wrong...

[LenaHuat]

Hi Aspellian
I'll reply your Q next week. On weekends, I rest my brains.
K is always welcome to kaypoh on every thread