AAR & TOL 02 (Nov 08 - Jul 09)

[winston]

Reminder to myself:-

Do you know why you are buying or selling in times like this ?

Selling on bad omens or something vague, like the collapse of the financial system is not good enough.

Buying on cheap prices ( compare to the peak ) or something vague like a potential stimulus program is also not good enough.

Do you know what are the drivers and risks for your stock ? Do you know why you are buying the stock ? Holding a stock also means buying that stock at the current price. And do you know why you are selling your stock at the current depressed price ?

[winston]

If you have been listening to Bloomberg this morning, it was as if the end of the world was here..

Yet, Japan was down 1% only, STI less than 1% and SSE only down 1%.

[winston]

And the same Bloomberg guy keep on saying that HK was down at 4% at one point. He did not say that HK is now only down 1.5%

[iam802]

TOL:

The dot com bust...brings the NASDAQ from a high of 5110 to about 1093. This represent an 80% loss.

The NASDAQ loss so much value because there are many 'dot.coms' that is not worth anything and is not generating REVENUE.

Let's focus on the current situation and think...

1. Can S&P lose 80% as well? We are currently more than 50% down.

2. Are businesses generating sufficient cashflow, revenue? Or are some of the assets just like 'eye balls', 'click thrus' etc?

3. 'Dot com' bubble start from 2000 and 'ends' in 2003 before NASDAQ starts to recover. It lasted 3 years.
- NASDAQ has more losses in 2001 (1 year after the initial plunge)
- Where are we now in this crisis? 1 year from the initial plunge

4. If we narrow the scope, it becomes easier to analyse. Let's talk about Singapore (we export everything).
- Will trade will be booming next year this time?
- Will consumers from US, Europe and other parts of Asia will be consuming like in 2005 to 2007?

Where does these questions lead us to?

What is my long term view of the economy?

Do I need to be concern about the market gyration? Does gahment actions really change the course of the economy or is it merely slowing things down?

How does it affect my trading plan?

[winston]

80% is a nice number. I like to buy when something has dropped 80% provided that I have confident that it can survive.

Example: If DBS, City DEV, Capitalnd, SGX, UOB all drops 80%, I think I would be buying

[kennynah]

so, if you think that the singapore gahmen wont let capitaland, citydev and others collapse...then why would we assume the US gahmen will allow their branded GSE, such as Fannie Mae and Freddie Mac, collapse?

[winston]

I dont think the current Obama admin is attached to Fannie or Freddie or the other institutions. The reason is that the current Obama admin did not build up this institutions ...

[winston]

TOL:-

All the parrots on CNBC and Bloomberg are very negative on the market for the next 2 years.

Does not mean that all the Sellers have already sold ? Or are they waiting for the bounce to sell ?

[kennynah]

this could mean, we are entering the final phase of selling....consisting of retail trades.... it can last for some time more... but my suspicion is not more than 3 weeks... but this is pure conjecture on my part, totally unsubstantiated with facts

[winston]

TOL:-

Something is really wrong. An email can cause Citi to rise 38% and the Dow to rise 380 points ?

Just because Citi had an operating profit for 2 months, it does that mean they would be profitable for the rest of the year. Operating Profit does not include Extraordinary Profits ( ie. writedowns, MTM etc. )




Must be alot of short covering..