AAR & TOL 01 (May 08 - Oct 08)

[winston]

A while back there was some discussion between "Time in the Market" versus "Timing the Market".

If you were not vested yesterday, there would be no way that you would be able to enjoy the upside yesterday afternoon and today, as you would be too afraid to buy..

However, what % loss would you have to endure last week to enjoy the fruits of yesterday afternoon & today ?

My conclusion, try to "time the market" but after a long and sharp downturn, there is a need to also change strategy to "time in the market"

[littlecupid]

VIX is a good tool to watch... a big disaster is also a good indication....ie blood in the streets

[winston]

TOL:-

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

2) Oil has corrected. I think it will stabilize from here. 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. As CNOOC has jumped alot, I will wait for the next train..

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 any 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. I have about 37% of my portfolio in US$ and HK$, so it should be good enough to ride the US$.

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 - With the new short-selling rules and the new "RTC", US equities may go up in the short-term as the shorts are being squeezed.

8) Shanghai - With the government supporting the market, the SSE should continue to go up in the short term. When the next sharp correction occurs, the government will then announce the RMB 400b fiscal & tax package, that they are currently putting together. They are still keeping this up their sleeves. In the meantime, all the SOEs have been instructed to buy back their shares. Every stock in the SSE hit their limits today. I can see this going on next week as well..

9) HK - The shorts are been squeezed. They will continue to be squeezed next week if they have not covered. If HK drops a lot, the HK regulators will then announce a ban in short-selling as the precedence has already been set.

7) Spore - Maybe some of the big boys would also like to squeeze the shorts here as well. I can see some good news being announced by the companies next week eg. contract wins etc..

8) Taiwan has corrected. Will follow US but I'm also worried about the slowdown in Taiwanese tech exports to the US.

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

10) 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.

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.

12) Is this a bear market rally or a reversal in the downtrend ? Who cares ? I'm a short term trader and the short term direction is definitely up. An object in motion will continue on it's journey unless there is a bigger force to make it change it change direction..

13) If it gets too euphoric next week, I may lighten up on my holding. Else, I will enjoy the ride as long as I can..

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.

[winston]

After Action Review ( AAR )

The markets went through on of their biggest reversal ever.

1) What did I do wrong and should try to improve ?

I should have bought some calls right at the extreme fear, just before lunch yesterday. You could see that the Chinese authorities will be forced to do something. Yet I did not buy because of extreme fear that lead to paralysis. BTW, I saw two Call Warrants being suspended when it touched the Call Price. I've never seen the market drop so much so fast. Next time, I must have at least a small call position.

2) What did I do right and should continue to do ?

I did not panic and sell into the extreme fear. I also did not take profits on Thursday afternoon although there was a huge rebound Thursday afternoon. I could feel that Friday was going to be a strong day. Let's hope Monday will also be strong..

[littlecupid]

massive rally killing the shorts and luring in novice investors next week....

contary speaking, I feel majority of commodities (ex gold & oil) will continue to correct by virtue of many banks customers liquidating these assets.... as well as demand drop .....let see

[winston]

TOL:-

It does not hurt to go thru your Financial Records this week-end, to think about the risks affecting your portfolio..

1) Do you have too much of your portfolio in a certain Currency ?

2) Do you have too much of your portfolio in a certain Bank or Brokerage Firm?

3) Do you have too much of your portfolio in a certain Asset Class eg. Equities, Bonds, Cash, Gold, Commodities, Properties, Warrants, Options etc ? For your Mutual Funds and Money Market Funds, are there too much in a certain company ?

4) Do you have too much of your assets in a certain Country ?

5) Do you have too much of your assets in a certain Industry ?

6) Do you have too much of your assets in a certain Company ? Example: your stock options in your company. If your company goes under, you will lose your stock options and your job..

7) Would your Insurance Company be around to pay for your claims ?

8) Would the company that you have been investing in, dealing with, be around in 3 or 5 years ?

9) Think twice about getting into a very long term contracts eg. Time Sharing, Dollar Cost Averaging Mutual Funds, Long Term Insurance Contracts, Commercial Properties etc.

10) When Gold drops to an "attractive" level, buy some physical gold coins. I bought some Canadian Maple Leaf Gold coins in 2000 for emergency purposes. I have Vietnamese friends, whose parents left Vietnam on boats, with just a few gold coins...

11) Singapore is relatively stable unlike Malaysia or Thailand. However, it does not hurt to also stock-pile some food, medicine, water, soap, basic essentials etc. When there is a crisis, you will not have time to react..

12) Is your Passport valid for more than 6 months in case you need to fly off urgently ?

13) Keep some Cash at home, both local currency and some US$. At least a few thousand $ in case you need to buy a plane ticket with cash..

Dont panic though. Keep a cool head. It is not the end of the world... I hope

Ha Ha... The last time I was this paranoid was in 1998, exactly 10 years ago .... so maybe it is time to buy now

[kennynah]

W :

i dont write much in this thread but now and then, i will read all of your TOLs... always very good to know what an experienced player is thinking ....

[helios]

TOL:-

13) Keep some Cash at home, both local currency and some US$. At least a few thousand $ in case you need to buy a plane ticket with cash..

Dont panic though. Keep a cool head. It is not the end of the world... I hope

Ha Ha... The last time I was this paranoid was in 1998, exactly 10 years ago ... so maybe it is time to buy now

Dear Winston,

is this the same as the paranoidial times in 1998?

your list is equivalent to get yourself to Resolution into 2009 year ...

seriously, i love to read your thoughts.

[winston]

In 1998, everything around you were dropping like flies... Equities, Bonds, Currency & Properties. Interest Rate was also going thru the roof. There were also riots in Indonesia, Korea, Malaysia etc.. Your Clob shares were all suspended too

Now in 2008, it's relativey not too bad in Asia, although you can see that things are starting to slow down..

[fclim]

Hi w,

i was almost moved to short the market due to all the bad news...
in the 'gambling' mode last week....

fortunately, i re-read some parts of Mr WB words again and saved myself from being foolish and losing months of my hard-earned pay....

instead of short, i went long and nimbled a super duper small bite on Best World... was thinking of K1 as well... but decided to KIV that one...

also, after reading Mr Oei's position on AIG, I also tried to bet a couple of hundreds of dollars on it and queued at $1.80, before the super rally... needless to say, I never did get quite closing to securing the bet...

anyway, i'm still of the opinion that in the long run, things are not settled yet....
still waiting for the 3 local banks to touch about their NAV... then, i may go long on them, slowly...

have fun,
fc