Friday, December 6, 2013

Just to say Hi.....see you all next year

Wow! it's has been almost more than one month I did not write or update anything on my blog. Looks like this will be my new normal until we see some serious market corrections.

As 2013 is coming to a close, it's may be a good idea to consolidate my thoughts and plan for 2014.

There are so much talks about bubbles. A bubble here and a bubble there. Just recently, the one piece suit that Bruce Lee wore in the Game of death sold for USD 100, 595(HKD 780,000). Go figure!

Are we in a bubble or are we in an over-valued market? Many argue that the market rarely crash when a cover magazine acknowledging a problem. If they are worried about bubbles, then most likely there are no serious bubbles. No worries, just keep climbing. Just walls of worries.

This is my lima sen worth of analysis.

This is a chart of KLCI index from 2000 till recent 2013. 

Prior to 2007/2008 collapse, there were 2 halves of the market rallies. Right after 2001 recession,  KLCI took 5 years to gain 60%. The second part, however, it only took the market to gain in 72% in just 2.5 years. That parabolic rise I would say has the characteristics of a bubble.

After the market recovered from a free fall from a cliff of 50% in sub-prime crisis, it took the market slightly more than 2 years to gain roughly about 100% before the PIIGS financial crisis triggered a severe correction. We went into a 20% correction which I thought the bear market was here. Alas, I was wrong. From late 2011 till now, the market went on to gain another 40%. There is no parabolic rise but the feeling is certainly eerie. People thought every dip is a buying opportunity which can be seen in a more and more narrow triangle. The volume however is thinning.......just not sure when it will run out of gas.

I have "Acrophobia", my legs are shaking standing at this elevated level. From here on, even the market don't go into a bear market, we are certainly in high risk of getting a very severe correction. 

May layman visual of what all the central bankers around the world did on QE looks like this.

It is certainly fun to swim in such a nice huge inflatable pool. We take comfort in artificial liquidity that makes us feel so safe and happy but a little nervous. Some are more aware of a possibility a rupture but to many it's just a "WTF" syndrome.  Nobody ever died when it rupture. Don't be a party spoiler, relax and have fun.

But. "Chotto matte kudasai"

Look at this. 

Corporate leverage is trending higher each year since we came out from 2007/2008 crisis and now is even higher than 2008.

Look at how NYSE margin debt. We are now higher than pre-dot com bubble burst and almost there to catch up with 2007 peak.

It is fun to leverage on ever rising market but when the market reversal comes. What is the impact of the de-leveraging? We don't need a brain with IQ 180 to find out the answer.  

I can go on and bombard you daily with a lot of anti-thesis but decided to keep quiet because thought what is the point of throwing cautions in the middle of a party? 

Speaking of parties especially getting close to Christmas and New Year. Don't drink and drive. When you don't drink and drive, lighten up the right foot. 

Just a remembrance of a favorite cool guy in Fast and Furious of mine died a few days ago. Brian - RIP.

And a remembrance of this cool guy too. May God bless your soul Nelson.

 "I hate race discrimination most intensely and in all its manifestations. I have fought it all during my life; I fight it now, and will do so until the end of my days."

Wednesday, October 30, 2013

Firing shots by regular columnist again

Saw this on the market watch.

Speed read:

  • Stock valuations in bubble territory - S & P 500 Dividend Yield 2%, Shiller PE ratio hitting 24X
  • Bears turn bulls - David Rosenberg and Noriel Roubini
  • No one wants bond
  • Leverage - 2010 ~ 2013 non-financial corporation borrowings increased by 1 trillion. It has a total of 14 trillions outstanding now.
  • Mum and pop are buying

In my yesterday posting, I was thinking we are the beginning stage of a bubble because a small group of people are getting cautious. Most of the participants are getting excited but the sentiment is not extreme enough and I hope they don't get more extreme some more. When it falls - it is going to be extreme too except it will be on the opposite direction. I was lamenting that I might need to sit out from the market longer than I thought.

Tuesday, October 29, 2013

Wall of worries???

Saw this in the Star. It is quite rare that professionals are acknowledging the market is getting pricey. It is also very rare that they expressed they are getting worried of limited upside potential. For the market to roll over with this kind of headlines is quite rare too. Or is it just climbing wall of worries? Me think more people will need to be sucked in before the big flush is triggered.

Sunday, October 27, 2013

Market Commentary

The 2014 Budget dust is finally settled down. I am not sure whether most people will buy on rumour and sell on news. Or instead of keep looking at the defensive side, what if there is a follow through buying??? especially on the mid and small cap. Momentum is still good but people need to be aware that they are getting more expensive. Mid cap is about 20% premium and selling for 14X PE. Small cap is about 70% premium and selling for 12X PE. I believe even with re-rating of small cap after being depressed for years, 12X PE is really difficult to justify. At these level of valuations, a lot of growth needed to keep pace with the valuations. Those people who are surfing out  need to be careful when the tides are out, you need to be able to land gracefully.  The real reason of price appreciation now is largely because of PE expansion.

Over in the US, I keep hearing the market is fairly valued. Judging from PE ratio alone, it is no where near in bubble territory. True. However, what is troubling is the E. One of the market analysis that I follow regularly Hussman weekly pointed out a couple of months ago that the current corporate/GDP is 70% above historical norms. A reversion to mean will cause the E to contract pretty badly.

He pointed out that the parabolic rise of S&P 500 may carry the market from around 1,700 to 1,900 and I won't be surprise it may overshoot to 2,000 level.  That means 13-15% potential overshoot from this level.

I rarely talk about my investment with friends mainly to avoid peer pressure. Some think I am running away from facing the reality but it is precisely this the reason why people get suck in and over stay in the market. The moment they are out of the game, they are automatically in the under-performance bucket.

I am happy to be under-performing temporarily. I am also quite happy with what I am doing now - nothing very spectacular - just arranging daily mundane activities.

Monday, October 14, 2013

Men vs Women Spending Habits

I was at first thinking to continue with the millionaire next door ...... part IV write-up but decided to break the routine a little bit.

I thought these info graphics are somewhat very universal even though the studies were done in the UK. It reinforces my conclusion that men and women are very different when come to spending habits. Men may make infrequent purchase but when they did - the bills can be quite big. A woman on the other hand makes frequent purchases but the amounts are usually not that damaging though it can be perceived as wasteful such as, the 10th pair of shoe but it's only cost $ 29.90 dear. A man may make infrequent purchase, for an example a Porsche but it's only cost $ 399 k dear. Men and women have one common ground though - flaws. The next time you get into couple money fight, just be a little gentle with each other.

Men Vs. Women - Spending Habits

Explore more infographics like this one on the web's largest information design community - Visually.

Sunday, October 6, 2013

The millionaire next door.......Part III

Life is full of's very irony that those jogging in a park regularly have very slim or fit bodies. Wealthy people get wealthier but they don't need money. Those have money will save even more and not spending it. Those fat people will continue to eat KFC or big Mac. Those good in play great defense game in financial management tends to allocate more time and energy to compound wealth even more by days. I suspect too those reading my entries do not need more advice. Those people who are frugal will be frugal without the need to be told.

It's a old classic argument of NATURE vs NURTURE. Are some people coded genetically good in money management or some people simply good because they were well schooled? Or is there a third explanation? That alternative is doctrine of FREE WILL. There is a strong argument in Christianity whether salvation is predestined or simply a person has a power of FREE CHOICES that unconstrained by external circumstances such as fate or divine will. It's a long story if I were to expound the origin of how human suffering started right from Adam and Eve made a wrong choice by taking the forbidden fruit. Adam and Eve were told not to eat the apple. When they committed sin, they greatest blame game in the universe begun. It was the serpent which deceived Eve and it was Eve who gave the apple to Adam. It was God's design fault that incorporated the Free Will feature in mankind............

In the book of the millionaire next door, they asked 3 questions to determine whether you are qualified to start the journey to become millionaire

1. Were your parent frugal?
2. Are you frugal?
3. Are your spouse even more frugal than you?

What is the point of the 3 questions? These are  no brainer questions, 3 yes to 3 questions surely qualify a person to have a better chance to accumulate wealth but was parent and spouse frugality within your control? I mean do you decide who are your parents or who you want to marry someone (or do not want to marry someone) based on frugality? Their argument is people tend to copy their parents behavior. If they have been nurtured in a consumption-based family, it is very difficult for them to break those habits. If their spouse is social conscious, they may ended up with a big fight if he or she decide to buy a used Kancil.

We can be bombarded with endless statistics that frugality is the cornerstone of wealth building. Frugality simply living below a person means. It is a choice. C-H-O-I-C-E. Making choices in life will never be easy. The conditions in making choices come in a package involving many trade-off. Those decisions are very hard and can never be made in isolation or vacuum.  Many believe in fate. It's a fate that they are born in a family(rich or poor). It's a fate they married or dated a person. True, but changing the outcome largely depending on each CHOICE we make. Our state of life is a result of a series of CHOICES we made over time. A person may be born in consumption-based family, they do have a choice to change course.

What about marriage? When a couple is dating, they should know whether the person that they want to spend the rest of their life is compatible with many of their values, including money management philosophy. Instability in marriage can throw a spanner in the works of wealth building. This again it's a choice. If a person is a compulsive saver dating a compulsive spender, they should know there will be many differences to be resolved. Some may be lucky, in the power of love, a person may change. But changing a person can difficult and require many sacrifices. Unresolved differences can lead to serious marriage problem. If they do run into a divorce, the divorce settlement and financial burden of being a single parent(if they have kids) can be painful. be continued..........

Monday, September 30, 2013

The millionaire next door ....... part II

EPF numbers is a good place to get an overview of majority of working class wealth. My gut feel tells me if a person could not retain much of their net worth in their EPF account, it is unlikely that they can have significant wealth outside their EPF account as well. Only persons with confidence of generating at least 8 - 10% will be likely to withdraw from their EPF savings for investment purpose. If it is for education or housing purpose, it is very likely that a person do not have have enough savings. The simple logic is if they are not financial distressed, why are they breaking their EPF piggy bank?

When I look at the numbers, there are only about 15,783 members with more than RM 1 million in their account. Even we include the borderline millionaire, as a percent to total 6 million active members is less than 1% or 0.3% to be very precise. The number is very. Very small.

The second table says 85% of members are earning less than RM 3,000 month but my interest is to study the "rich" people. When I sieved through the Economic Planning Unit(EPU) data, I found that household income with more than RM 5,000 is rising fast from about 10% in 1999 to about 34% in 2012. Most of them are concentrated in the urban area.

If 33% of people is earning more than RM 5 k, I figure out if someone can have monthly contribution of RM 1k/month, that will put 33% of household to be in RM 800 k bracket when they are in their late 40s. Surprisingly, if we look at the first table, there are only 3,000 people in this bracket.

The top 20% highest income earner in Malaysia is drawing an average of RM 12 k/month. If you are earning more than RM 10 k, that I figure will put you in the top 3% earner in this country. Again, the number of wealthy people in comparison to their earning power is too low! I would expect to see at least about 100,000 millionaires but shockingly only less than 20,000.

In the book of the millionaire next door, the same shocking statistics is incredibly consistent manifesting itself.

  • More than half of America wealth owned by 3.5% of households. 
  • More than 7 millions households earn more than USD 100 k
  • More than 25 millions households earn more than USD $ 50 k
  • Average net worth of American, excluding home equity, is only USD 15 k

How come there are so little affluent people even though they are hardworking, educated and high income earner?

How come? How come they are not wealthy?

The measurement of wealthy is relative. Let's put overall happiness index asides for a while, let's focus on more down-to-earth materialistic measurement. For a person earning RM 40 k per year at the age of 40, is considered wealthy if he accumulated at least RM 160 k. On the other hand, a person is earning RM 400 k per year, at the same age of 40, if he accumulated only RM 500 k does not consider to be wealthy. At his income and age, he should accumulate at least RM 1.6  million, if not more!

The formula is Realizable Income x Age / 10

I found this formula is very useful, though it is a little bit subjective or arbitrary derived by the authors, but that at least it is a very good effort to quantify or to measure whether a person is considered wealthy. I find it very sensible because it helps to establish measurement of a person ability to accumulate wealth based on their potential. It is very fair because the measurement is taken in relation to their earning power. It is also telling us how long a person can sustain him or herself before running out of money. I bet that a person with RM 160 k wealth from RM 40 k income can sustain him/herself at least 5-7 years without a single sen coming in. A person with RM 500 k wealth but earning RM 400 k/year will likely to run out of money within 2 years if he cannot find a similar job!

......................................................................................................................................... to be continued

Monday, September 23, 2013

The millionaire next door......part 1

What are the signs that you have too much time? I find that it is getting increasingly difficult to find undervalued stocks. So I decided to take a break(it has been almost 1 year plus actually) and let the market sort out by itself. I am now have so much time that I begin to re-run TVB dramas that produced between 80s and 90s. I hardly watched any of the TVB drama post millennium perhaps the quality of scripts and cast have not been as good as before. The Korean dominates post 2000. 

I know that I am in trouble because I started to go back watching classic dramas(a sign of old age). The latest series is The Shanghai Bund. I remembered in those days, housewives would prepare their dinner early so that they could watched their favorite drama at 6 pm. The streets will literally empty because most people will be glued on the TV screens. I remembered TV was a luxury item that not every household can afford it. We would need to "tumpang" watching at neighbors. The doors of neighbors opened widely that we could walked in and out as if it was our own house. 

Today Malaysian house probably will have at least 2 TVs(mine one only) protected by high walls and monitored by CCTV(mine none) and guards and gates, things have changed rapidly. We probably have done a little bit better materially but certainly going backwards spiritually - getting more insecure. 

Chow Yun Fat is certainly my idol. Back then he was 25 years old, today he is fast approaching 60. There is no mistake that people called him People's actor. I did not know much about his humble background until 33 years later where I get more information about him by "google-ling". 

Chow was born in Lamma IslandHong Kong to a mother who was a cleaning lady and vegetable farmer, and a father who worked on a Shell Oil Company tanker.[2][3] Of Hakka origins,[4][5] he grew up in a farming community on Lamma Island in a house with no electricity.[6] He woke up at dawn each morning to help his mother sell herbal jelly and Hakka tea-pudding on the streets and in the afternoons he went to work in the fields. His family moved to Kowloon when he was ten. At seventeen, he quit school to help support the family by doing odd jobs including bellboy,[7] postman, camera salesman, and taxi driver. His life started to change when he responded to a newspaper advertisement and his actor-trainee application was accepted by TVB, the local television station. He signed a three-year contract with the studio and made his acting debut. With his striking good looks and easy-going style, Chow became a heartthrob and a familiar face in soap operas that were exported internationally.
He is a superstar today with net worth more than billions(HKD) but surprisingly he lives a frugal lifestyle. He is frequently spotted taking public buses. The best part of all, he pledged to donate 99% of his wealth after he dies.

He still patron wet market, going to Kowloon to buy 'vegetables'. I can't agree more with him that there is a strong correlation between shopping at wet market and finance literacy. It's the best place that you learn about inflation and budgeting. Jim Rogers is another person who shops frequently at the wet market. 

He walks freely with his wife with no social consciousness. Can't find a better picture but this the one that I can find conveniently to show that she is a plain Jane but a person who can provide security, support and frankness with him. They stay married for 26 years. She is his mean finance manager.  

Since this is a finance blog - I must go on to talk about personal finance stuffs though gossiping sometimes is fun. There are two superstar Chows who are very investment savvy - he and Stephen Chow.

Both of them famed for their speculative or investment skills. Both of them earns substantial profits from their property investments even though they also made killings profits from stock market and businesses.

So far, it is quite true that behind every successful man there is a woman. It was unfortunate that Stephen and his longtime girlfriend  Yu Wenfeng did not work out well at the end after 10 years of dating. She is the youngest daughter of one of the largest real estate founder Hong Kong Construction Holdings, Ltd. She was the head of finance for Stephen Chow company. She has been his excellent advisor by asking him to refurbish and then hold back from selling a particular property that resulted his net worth to increase by HK$2 billion.

There is a favorite pair of mine - Sean Lau Ching Wan and Amy Kwok.

Lau Ching Wan 1992 successful tv series The Greed of Man has created a strong brand of him as investment actor. His well accepted image has landed him various stock market movies like Overheard, Overheard 2, Life without principle or even in a less popular ATV series of divine retribution. 

He was quite straight forward to tell everyone that he is quite bad with investment decisions and knew very little about investment. He leaves everything to his wife Amy Kwok. Their lifestyle is extremely frugal  like regular salaried "workers" - going to wet market, breakfast at old shop and shopping at regular shops. 

His wife was once aspired to be a professor in the university ended up winning Miss Hong Kong 1991 title and a successful actress. She is almost like goddess reincarnation who has beauty, brain and tremendous character. She earns a degree in mechanical engineering and master degree in electronics. She seems to be really the one that wearing the pants at home. 

Most people would know especially in entertainment world that easy money can come and go very easily. She probably realized that. As early of their acting career and dating way back to 1994, she has been in the driver seat making property investment decision. Lau Ching Wan is the passive investor by just entrusted the money to her. She was so good at it that she did never lose any money in property speculation/investment. She had withdrew herself from acting since 2006 to concentrate managing the family affair and finance.

She is very hands-on. She dressed like a regular housewife not shopping for LV bags but shopping for best property deals in town. 

What I like about this couple is though they did not reach the superstar status, commanding a lot lesser acting fees, but by compounding their wealth over time, they accumulated hundreds of million wealth quietly. They seems to be happily married for 15 years.

This reminds me of the traits of many wealthy people in a book written and published in 1995. 

Friday, September 6, 2013

The Greed of Man - Final part

Do we sometimes wish that we have supernatural power when comes to speculating or investing. Do we wish we can fly? 

Do we wish we can see the closing price printed in tomorrow's newspaper? Above all, do we wish we can be god? Can we make things happen by having strong self belief. In the final battle between Ar-Bok and Ting Hai, he was very confident that that stock market will go up despite of all the evidences pointed to American will hit Iraq, hence down is the path of the least resistance. He said if you have strong enough convictions, you can make things happen. If you keep thinking of getting an Ace, you will get an Ace. That is the power of self fulfillment prophecy. This what a NLP program will teach you. If you keep thinking of something and repeat the same thoughts over and over again million of times, thoughts will transform into actions ultimately making dreams come true.

Relying on self belief, astrology or seeing magicians  are not uncommon especially among Asian investors or speculators. A research house like CLSA, suppose to be an intellectual powerhouse, has been publishing a slideruler to guide many of its customer especially in Hong Kong who believe very strongly in Feng Shui to make many money decisions. The below chart was published around Chinese New Year. How accurate is this call?

At one glance, it is seems to be very accurate. If we feel the market is pretty shitty now thus our minds and eyes are easy to be deceived. When we compare the actual results, it is seems to be completely opposite. CSLA said Hang Seng Index supposed to rally all the way to July and enter correction phase until end of September. The opposite seems to be happening. The market rally fizzled out in January and has been sliding and bottomed out in June and now is going up.

So do you still believe in market wizards? Many do, after all, Warren Buffet will not be called as god of stocks.

The story continues, Ar-Bok defeated Ting Hai simply not because he has strong self belief. No doubt he believed his wife could brought him luck and inspirations. No doubt he believed he has some six sense but above all, he understood the power of liquidity. In his term, he called it "borrowing lucks".

Prior to market collapsed, Fong Chun Sang helped some very righteous businessmen who refused to bribe to get their company listed. One of them believe to be "Li Ka Shing" who had a concrete plan of what to do with his business. He had done tremendous home works to acquire companies on cheap if these companies collapsed when the bubble pricked. He had visions of how a port can turned into luxury properties in the future.

Many years later Ar-Bok's father after passed away, he thought these businessmen can help him as a favor of Ar-Bok's father had done. He presented three halves HKD 500 that represent a gentleman agreement for favor repayment.

Ar Bok requested these three richest men in Hong Kong to help him to buy stock when stock market opened on Monday. The powerful liquidity would surely flushed out short sellers.

The promised was fulfilled. Hang Seng index broke above 10,000 for the first time. In reality, 1992 actual Hang Seng index was at around 4300. The script writer over exaggerated the number by doubling it yet we took 11,210 as absolute truth because it is so familiar to us.

The drama ended with bitter sweet when Ar Mui died in the arm of Ar Bok's arms peacefully. She seems to be perfectly happy as she thought all her dreams had been fulfilled. How a person feel with not so happy ending tells a lot about a person. It tells a lot whether a person can accept imperfection is just part of this world. We can't have everything going our way, it's just unrealistic. Though we may feel a little sober for a few hours thinking of the satisfying ending(not perfect ending) but we just got to move on.................

Friday, August 23, 2013

The Greed of Man - Part III

Strange but true - reminds me a lot about investing lessons by re-watching this drama.

(1) Make investing decision as if a failed decision will make you go bankrupt.

It was certainly comical watching Ar-Bok running between his 4 small businesses and a brokerage firm. He will close his shops whenever he made enough and ran to the brokerage firm trying to multiply his wealth by betting in the stock market.

Unfortunately, he came out from the shop with disappointed face because he lost his each of his bet.

One fine day he found a great inspiration. Sold off all his assets and businesses and put everything into stock market. By burning all his bridges, failure was not an option. He figured he kept losing money because he kept thinking no big deal that he lost it because he can always make it up in his next bet. Just like most of us were advised to cut loss - live to fight another day. The trouble with many of us also thinking since it is money that we can afford to "throw away", we place our bets very carefree and carelessly too.

He tortured himself and Ar-Mei by not doing anything and not eating anything. He must and will succeed or else they will end up living on the streets penniless. Though it was an over-exaggeration that he became a millionaire within 48 hours, the message was powerful - you must hit the bull eye or else ........

(2) Can "blind fists killed a grand master?". It was really funny how a person like Ting Hai who does not know anything about stock or future killed Tou Tou(TT). TT was a cocky trader who crowned himself Zhu Ge Liang the famous strategist of ancient time. He thought cooking the 5 crabs(Hai's) to revenge them for killing Teng Teng,  a sister of Ar-Bok, who he fell in love. He was taking advantage of Ah Hau, the eldest son of Ting Hai which took the company to public. TT was playing long and short to disoriented him left him with huge losses.

The initial win was very thrilling but TT was too obsessed of revenge but forgetting that the market is getting very overbought. Ar Bok figured that out saying the heavy buying volume supported by retail investors will soon ran out of oxygen and a market crash was imminent. Ar Bok look like a dummy but when he cited the volume similar prior to 1973 stock market crash, I was totally impressed. He stayed out on the day but TT planned to execute his plan to acquired their company.

The idiot Ting Hai who knew nothing should seek advice from stock market guru. He begged Man Yi who just came out from prison for help. Man Yi was saying there is no need any skill. All he needs was luck and go against the crowd. He did precisely that shorted the future contracts which failed to break through 4000 points. The stock market did collapsed and he made 4 billion dollars.

Ting Hai was impressed that Man Yi was really a genius. Man Yi who advised Ting Hai himself lost 90 million dollar. See, that was a perfect example of adviser did not walk the talk. Actually there are tonnes of financial planners and insurance consultants who could not manage their own finances will keep advising people.

During the 4 days market closed, Ting Hai seek Man Yi advice again what should he do? Man Yi advised him to burnt his enemy to eternal death. TT was highly emotional trying to defend $ 1 support but broke through due to heavy selling by Ting Hai. TT did not cut loss and trying to cover up he has deep pocket and taking every sell orders. Ting Hai was so mad that keep selling and sent the stock price down to 10 cents. TT effectively went bankrupt because he was buying all the way from $ 3.

These plots have many great lessons

  • Obsess with a company without taking into consideration of overall market is extremely dangerous. When market is dominated by narrow stocks to send indexes higher and higher, there are plenty of stocks can be attractively valued. There are plenty of stocks with single digit PE but when the big storm comes, it can also kena whack.
  • You really don't need IQ of 180 to be in stock market. Buy when there is blood on the street and sell when a shoe shine boy gives you stock tips. Pure and simple.
  • Dollar averaging down on leverage? Stupid idea. Dollar averaging can only work over a long period of time but never in a short time.
  • Beware of many crabs trying to teach us about financial planning while they can't walk straight.
  • Do you need luck yes. Plenty of them. Definition of LUCK = PREPARATION + OPPORTUNITIES.

Tuesday, August 13, 2013

The Greed of Man - Part II

I used to advise smart guys with MBA go and watch a movie or pick up a novel and read. They can teach us more things about human and investing. One of the reasons that I started to write a little more than usual because I see the old pattern of mature bull run is manifesting itself again. Just two weeks ago, I said I have turned very cautious because the time is near - 3 months, 6 months, 1 year or could be even 2 years before a major correction or a bear market set in. I praised the retail investors that they could be a lot smarter this time but looks like it is almost impossible for leopard to change its spots. They are back. Yes, the retail investors are back again. Daily participation is getting higher of 20% and if it inches higher around 35-40%, a shoe shine boy will give you stock tips. 

You will hear very frequent of people making 30% return in a week. You will hear people tell you the greater the risk, the greater the reward. 

That was the first phrase opening of a show down between Fong Chun Sang and Chen Man Yi. Fong Chun Sang who is a righteous man hated corrupted people had a great plan to bring down the corrupts - mafia, policeman and regulators. He planned to prick the stock market bubble. He knew Man Yi very well who is very fond of naked short selling. Chun Sang quietly amassed a lot stocks to execute his perfect short squeeze on Chen Man Yi. Though it was novel in nature but it does happened in real life hat reminds me of how Porsche created big short squeeze in 2008. Porsche has quietly building its position to acquire Volkswagen through cash-settled options. Then in the late 2008, they went out to the market announced that they secretly amassed of a lot of Volkswagen shares through cash-settle options with various banks. That created the mother of all short squeeze sending the share shot up to Euro 1005 in one day. In that year, Porshe made a gain of Euro 6.3 billion.

Back to the drama, Chun Sang was a genius with mixed lucks. The Chun Sang - Man Yi pair was a classic hedge fund manager though this job did not exist in the 70s. Man Yi was betting the stock price of a company would fall, convinced an impending legal announcement that the company needed to compensate million of dollars to British government.

Chun Sang took a contrarian stance. He bought every single shares that Man Yi was short-selling and sending the share price on an upward trend prior to the announcement. He was real lucky, while the whole world think it was unlikely the court would rule in favor of the company, but it did!. The good news strapped the stock to a rocket going to moon. The ruling was the catalyst but short squeezed was the real reason the stock price defied the gravity. Chun Sang would have been easily the richest man with that victory.

Unfortunately, Chun Sang met Ting Hai who mis-understood that he had stolen his sweetheart Ar-Ling. Chun Sang was beaten to coma state when Ting Hai saw a ring thinking Chun Sang must be proposing to Ar-Ling. (True on both counts but ...................)

He was unable to react to when the overheated market finally collapsed in 73-74 bear market. He could not take profit or cut losses  and repaid his borrowings. He was declared bankrupt and that was the beginning of a tragedy that brought a series of curses to his whole family.

It was really a heartache to watch how a family risen to the top of the world and then to the dust.

The 1973/74 bear market also had a huge impact on another person, Yip Tin, the right hand man of Chun Sang and Chin Bok's sifu.  He was dreaming to be a God of Wall Street and probably the best description that I ever seen how they describe a chartist of modern day. He would withdrew himself surrounded by cemetery cutting off the world just to focus on one that matters - price. I was really puzzled how a first rate person like that got wiped out in the stock market.

The greater the risk, the greater the reward. 

But remember too - 

Man plans, God laughs.