AAR & TOL 01 (May 08 - Oct 08)

[winston]

AAR:-

The takeover of Huiyuan Juice by Coca Cola at close to a 300% premium, hammers it into me that buying Industry Leaders are of utmost importance.

[winston]

TOL

1) The bad news will persist for a while.

2) Oil has corrected. I think it will stabilize from here with the floor being US$100. If it drops further, I think the Commodity Funds will be buying. In the meantime, the price of Oil may be supported by the Nigerian militants, Hurricanes, Opec cutting back, China filling up their Strategic Reserve etc. I have started to nibble on some oil stocks eg. CNOOC. I also have Ezra, KS Energy, Swiber & SPC. ( Need to be careful about my big exposure to O&G )

3) Gold is still strong. I think that it will trend downwards with some technical rebounds. I do not think that it is the right time to buy gold stocks or any Gold ETF.

4) The US$ has strengthened especially against the Euro. I think the USD will continue to rise against the Euro for a while.

5) In the last Commodity Run, a lot of the funds missed the boat. I think there is now a lot of people waiting on the sidelines to jump into commodities. The only thing holding them back is the slew of bad news. If one wants to get some exposure to commodities, Oil may be a safer bet than Gold or Industrial Metals.

6) I expect China to start stock-piling Commodities, taking advantage of the strong US$ and low Commodity prices. This could provide some support to Commodity prices as well as the Commodity Currencies eg. Loonie, AUD and Real.

7) US Equities will be in a sideways range, with a downward bias.

8) HK & Shanghai - Markets have corrected quite a bit. I do not see it going anywhere from here. Safer to buy a Put when the market gets a bit extended and a Call when it gets oversold. It will probably be range bound for a while, also with a downward bias.

7) As for Spore, I dont see it going anywhere until year-end. There may be some values emerging. However, I prefer to keep some cash at this point in time.

8) Taiwan has corrected. Liquidity from foreign funds could be the catalyst for Taiwan to go up. But I'm also worried about the slowdown in Taiwanese tech exports to the US.

9) Still a bit too early to buy Russia.

10) Am watching Korea as well. I want to see the bottom of the Korean Won first.

11) I will be continuing my strategy of trading warrants ( calls & puts on the indices ) to capitalize on any short-term fluctuations, while still investing in stocks for the medium term.

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.

[kennynah]

flawless...want to give ideas...oso no more...all you say finish already... a very good plan is half a battle won before engagement... congrats !!!

[littlecupid]

Hi Winston,

Interested in Taiwan & Korea also.... where do you get exposure from ?

MSCI Taiwan futures a good one ?

[winston]

Hi littlecupid,

Have not heard from you in a while

I think one can play Korea & Taiwan thru the Lyxor Korea and Lyxor Taiwan funds, listed in Singapore.

But be careful, I'm also a bit concern about the outflow of funds from the emerging markets.

Take care,
Winston

[littlecupid]

Lyxor K/T Not that liquid leh... maybe have to sniff around on the unit trust...

Yes MIA for a while....capital not big enuff like u guys to be full time .... .

Also, nothing much to do... but sin market looks like capitulating....my only concern is that US market is still quite high....

[kennynah]

....my only concern is that US market is still quite high....

LC : hope you are well..

i am curious with your statement above....care to give us your thoughts on why you have this concern that US market is still quite high? i assume you are therefore expecting further substantial decline in US mkt indexes?

[littlecupid]

....my only concern is that US market is still quite high....

LC : hope you are well..

i am curious with your statement above....care to give us your thoughts on why you have this concern that US market is still quite high? i assume you are therefore expecting further substantial decline in US mkt indexes?

hehe...can be better....

Just some thoughts of mine.....
US YTD decline only 13 ?? % only...still chicken feed...
PE of US companies 23 ?? still very high with earnings coming down still
VIX still so low....probably traders know better...haha

STI can only recover if the US market perform....so still no hurry to add to long position...meanwhile just keep my shorts still open... just my gibberish comments hor

[winston]

Let's discuss a very controversial subject tonight

Averaging Down

Almost every article and book that I've read on trading, mentioned that one should never average down.

However, if one wants to average down, what are some guidelines that one could follow ?

Example:-
1) Never catch a falling knife
2) Let the knife drop to the ground first.
3) Allow the knife to bounce twice ot three times off it's range low
4) Let a trough form. The longer the trough, the better
5) Ensure that the market direction is bullish
6) Confirm that Fundamentals for that stock have not changed
7) Identify catalysts on why the stock would start moving up
8) Wait for the catalysts to happen before buying
9) Buy in tranches
Have I miss anything ?

The above is assuming you have done your homework right in the first place ie.
1) Attractive Industry
2) Industry Leader
3) Good Brand
4) Margin of Safety etc..

[helios]

10. be patient. count slowly from 1 to 20, (using hands and toes). part of trading psychology if you really need to execute a trade.