Tuesday, September 27, 2011

All clear?

I mentioned in my commentary that we need to watch Dow 10,719. Why? It's because the market was hanging by a thread. Surprisingly the market made a big U turn after tested it twice and closed above that level. Can I explain? Nope. Do I need to explain? Nope. I've almost given up hope to explain why markets go up or down. I think we need to give Greece a break. It has been the beating boy whenever people are running out of reasons to explain things.

Some smart people have finally try to estimate how big will be the problem if Greece was to default. The IMF estimated the default cost about 400 billion. This does not look like a big number but the financial markets have become so complicated with derivatives, swap and etc... worst still if these instruments were chopped and diced and sold to investors all over the world. I doubt people can quantify it and the only historical reference was 2008/2009 CDS fiasco. That's why people were so freaking paranoid. Why haven't I figured this out? Damn, by the time people like me can explain this in English, I have reasonable reasons to believe we are almost at the end of this European fiasco............

I do monitor my own level of bearishness. I remember my mood was very bearish around March 2009 , I was expecting Public Bank to go down a lot. This time, I noticed that I was very bearish about Tenaga and expect it to go down to 4.5 level. Below 5 but not very close. I also noticed that almost 29/30 FBM KLCI stocks were down yesterday. That was a sign of people throwing towels.

When the market opened this morning, the spread between buy an sell was totally unrealistic. The buyers were expecting people to sell them at lower than yesterday closing price. That's extreme. When I saw stocks like Genting Malaysia got beaten down to less than $3, SP Setia down to less than $ 3. To be honest, even a bull like myself was also shaken. Dare not publish a word on my blog. That is a sign that blood is on the street. These are signs of capitulation.

Under environment like this, I devise a two-track-strategy. One track is for buy and hold strategy like Turtle portfolio with almost zero turnover and another track is market-timing strategy. After this U turn, my market-timing strategy is telling me to watch Dow 11,500 level. Dow went into free fall(twice) when it failed to crack above this level. That is why you see the split personalities in me, if you have not noticed it already.

The 6 million dollar question is did I buy stocks last two days? :-)


dukuhead said...

yes, soooo... did you or did you not buy stocks in the last 2 days? answer that and win 64 million bucks.

Datuk said...

For the typical momentum investors, they usually refraint from trading during the down cycle. In this respect, you are really a contrarian!!! It's tantamount to an attempt to get a free falling knife !!!! Hope you never burnt your hard earn money.

On the macro view, I think the current weak economy won't be resolved by just settled the Greek issue. The problem is much bigger than this !!!!

The western economy is entangled with the problem of real negative interest and surmounting with disastrous level of sovereignty debts. Consequently, it had limited the space for government to stimulate the demand via lower tax. In a nutshell, the above problems have paralyze the stimulus role of goverment in the weak economy cycle.

I expect big recession to untie these abnormal equation. All comodities prices would be collapese anytimes from now.....All equityies markets will be retreat at least another 30%!!!

Turtleinvestor said...


Only liar will tell you they never lose money on a single stock.

I understand the logic of deleveraging and many governments are running out of fire power.

Japanese market has been deleveraging for 20 years but it also present great trading opportunity from time to time.

These buggers(politicians) will continue to increase their debt level. I do not know when and where will it lead us.

I am not sure of everything except one: the market will be wild for a long time.

You are right for one more thing, don't be too cocky. I am fallible.

arkan said...

I'm not intend to be cocky in the first place but i like to to put reality in proper perspective

From my view point, the probability of losing money is bigger when trading in a down trend market. Just a coutious of word!!!!

I taught you are a value and long term investor judging form yoru web title ...Turtle Investing Diary. In my opinion, you should not off track from your investing philosophy......That's the sure way from making money in bursa....

If you are offended with my words....Kindly accept my apology.
After all, the inteligent investor
must be able to adopt an open approach.....acknowledging wrong if it's a factual reality and be prepared to change.

Turtleinvestor said...


Don't worry about it. I appreciate everyone's input. I'm not offended at all.