Investment Strategies 01 (Nov 08 - May 10)

[winston]

Ha Ha .. As I have said, I dont know the currency market that well and any answer I give you is just slightly above BS ..

1) I have some EUR because it's sitting in my DBS account in Singapore. The EUR is not there because of active currency management

2) I do not think that any RMB appreciation will have any impact on the price of Commodities. The Chinese are buying Commodities with their USD not RMB. In addition, I also cant see how the Chinese can continue to buy Commodities at such high prices just to store them. The USD is not becoming worthless tomorrow so there's no need to spend all their USD.

[kennynah]

1) I have some EUR because it's sitting in my DBS account in Singapore. The EUR is not there because of active currency management

ah so desu-ne.... you alt currency is SGD....hmmm...interesting...i tend to agree there's a chance SGD can strengthen against eur a little further more...

2) I do not think that any RMB appreciation will have any impact on the price of Commodities. The Chinese are buying Commodities with their USD not RMB. In addition, I also cant see how the Chinese can continue to buy Commodities at such high prices just to store them. The USD is not becoming worthless tomorrow so there's no need to spend all their USD.

it is very interesting (and surprising) to hear your views that a stronger RMB will not have an impact on commodities pricings...my unqualified opinion is the exact opposite...i happen to think that a significantly stronger RMB will send ripples throughout the commodities markets...upwards

*note : above are thoughts from a shake leg kopi-o-siew dai drinker....me...

[winston]

TOL:-

In the market, there are two types of money:
1) the "hot money" that's speculating on any short term opportunities and
2) the "long money" that are "buying & hold"

So under the current environment, who's the dominant player and what are they doing ?

[winston]

TOL:-

The market did a technical rebound.

Is it time to short in anticipation that the European Contagion will spread ?

Is the fear big enough to cause a panic ?

Is the current situation enough to excite the opportunists to start shorting ?

Or would the money on the sidelines be buying on dips ?

Conclusion: The money is not in the corner yet and I dont want to be too early. The wait continues

[winston]

TOL:-

Not that there's a bit of fear of an European Contagion, it's time to revisit my Investment Strategy.

I'm still using my 70% Strategic and 30% Tactical Allocation approach.

1) For the 70% Strategic part, I think that the correct Asset Class is still Cash.

2) For the 30% Tactical part, I will be switching from "Swing Trading" to "Position Trading" as earnings season in HK is almost over.

3) In addition to some "Position Trading", I may also buy some Puts on the HSI if the opportunity presents itself.

4) I may also add to my S&P Inverse ETF if I think that there's real panic in the air. Right now, I dont really feel the fear yet.

[winston]

How to Lock in a 339% Profit in Less Than a Year By Dr. Steve Sjuggerud
Wednesday, May 5, 2010

Matt Badiali's readers just locked in an astounding 339% profit on Jinshan Gold Mines earlier this week… It's a stock he recommended less than a year ago.

As of last week, his S&A Resource Report recommended list had a total of four stocks he'd held for less than a year that were up over 150%.

How can you rack up such enormous gains? Matt explained it to me yesterday, as he sat in my office…

"The other mining stock analysts out there set price targets for their recommendations – and once the stock hits their price target, they get out. The thing is… you need to have the courage to stay in there when you're right."

Dr. Richard Smith was in my office at the same time, and he fully agreed. Richard has a PhD in math and has made a business of helping investors determine the optimal time to sell to maximize your returns. He said:

"Staying with your winners is the real key. You just get a few big trades in your lifetime… How you handle those few trades determines whether you'll have ordinary results or extraordinary gains."

Matt's trade in Jinshan is a classic example of sticking with your winners and then using a trailing stop to cut you out of the trade at the right time.

The chart on this page shows exactly what I mean. The black line is the share price of Jinshan Gold Mines. The blue line is Matt's trailing stop:

The idea of using trailing stops to exit is simple. Let's use a 25% trailing stop as an example…

If you buy a stock at $10, your 25% stop is $7.50. If it closes below $7.50, you sell, no ifs, ands, or buts. If the stock rises to $20, your stop "trails" it, rising to $15 (that's 25% below $20). If the stock goes to $40, then your trailing stop is $30. It's a pretty simple idea.

In Matt's case, he set a 50% trailing stop to start. That's wider than I normally use. If a stock drops 50%, it has to double to get you back to break even. That's a lot to ask. But with small, super-volatile mining stocks – like the kind Matt recommends – his gives them more "room."

In short, Matt had the courage to be right. As you can see, as the stock went up, the trailing stop went up. And it let Matt's readers maximize their profits.

Setting a "target price" won't let you maximize your profits. You can't know today if a crazy bull market in gold will kick in tomorrow… if the price of gold will go up… or if the company will add to its reserves. But you can STAY IN THERE when things are going right.

Matt did it right. He rode Jinshan shares all the way up, for hundreds of percent profits. Then, even when the gains were getting ridiculous, he didn't cash out. He just tightened his stop to 15%.

He still couldn't know how much higher Jinshan would go. So he used a trailing stop to take his emotions out of the decision on when to exit.

Look… please understand this: A good trade is made up of a good entry AND a good exit. Most investors spend all their time getting the entry right… and spend no time on the exit.

If you use a trailing stop – I usually recommend a trailing stop of 25% – then you can hang in on big rallies, while still protecting your downside. And you'll dramatically increase your percentage chance of having a profitable portfolio.

As Richard explained, it's hard for people to cut their losses… but it's even harder for people to let their winners ride.

The thing is, if you want to make Jinshan-like 339% profits in less than a year, you have to be willing to stay with your winners. It really is as simple as that.

Source: Daily Wealth

[winston]

TOL:-

Now that there's some panic among the momentum investors, it's time to clean up the watch-list to have some "Position Trades".

I'm no longer "Scalping" and "Swing Trading" unless it's for the short side.

It may take some time for the momentum players to exit their position, so there's no need to hurry into those positions unless there's a strong catalyst for the stocks to go up.

[winston]

TOL:-

1) The shorts would be shorting and trying to push the market down at the opening

2) There are also some jumpy retail investors who would be selling at the opening

3) Unless one can sell at the opening at a good price, a better time to sell is on the technical rebound, if one really wants to sell today.

4) But why are you selling today ? Because everyone is selling ?

5) If I read the situation correctly, it will gap down at the opening. By the end of the day, there would be some short-covering. If I'm short the market, I would want some money in my pocket before the week-end.
Anything can happen over the week-end..

6) If you have been in Cash, when do you want to time your entry ? Today or next week ?

7) if you have been short, when do you want to time your exit ? Today or next week ?

[millionairemind]

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...

[winston]

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

The US is already lending money through the IMF.

I'm waiting to see when the Chinese would be coming in.