Turtle Portfolio Record Housekeeping

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Now, why bought into Tanjong? Trying to cut a long story short. Defensive nature of power business and gaming plus 6-7% dividend yield. Not many stocks qualified for buy and hold, this is one of them. Recent Egyptian plants refinancing costs charged out as expense caused profit declined in the last financial year quarter plus people going after higher beta stocks will encourage people liquidate lower beta stock like this present a good opportunity to accumulate. The stock has rather been resilient throughout the crisis except a sharp drop in October 2008 but recovered pretty rapidly.

Turtle bought 200 shares of Tanjong Plc

Turtle bought 200 shares of Tanjong PLC at RM 13.5/share.

Overly pessimistic on US dollar?

Just looking at the present data in term of federal debt to GDP for the US is not as bad it's seems. However, looking into future, from Bill Gross's tone, is very worrisome:

Private sector deleveraging, reregulation and reduced consumption all argue for a real growth rate in the U.S. that requires a government checkbook for years to come just to keep its head above the 1% required to stabilize unemployment. Five more years of those 10% of GDP deficits will quickly raise America’s debt to GDP level to over 100%, a level that the rating services – and more importantly the markets – recognize as a point of no return. At 100% debt to GDP, the interest on the debt might amount to 5% or 6% of annual output alone,.......

...... promise that Federal spending for Social Security, Medicare, and Medicaid will collectively increase by 6% of GDP over the next 20 years, leading to even larger deficits unless taxes are increased proportionately. Collectively these three programs represent an approximate $40 trillion liability that will have to be paid. If not, you can add that present value figure to the current $10 trillion deficit and reach a 300% of GDP figure – a number that resembles Latin American economies such as Argentina and Brazil over the past century.

The obvious solution to both dollar weakness and higher yields is to move quickly towards a more balanced budget once a sustained recovery is assured, but don’t count on the former or the latter. It is probable that trillion-dollar deficits are here to stay because any recovery is likely to reflect “new normal” GDP growth rates of 1%-2% not 3%+ as we used to have. Staying rich in this future world will require strategies that reflect this altered vision of global economic growth and delevered financial markets. Bond investors should therefore confine maturities to the front end of yield curves where continuing low yields and downside price protection is more probable. Holders of dollars should diversify their own baskets before central banks and sovereign wealth funds ultimately do the same. All investors should expect considerably lower rates of return than what they grew accustomed to only a few years ago. Staying rich in the “new normal” may not require investors to resemble Balzac as much as Will Rogers, who opined in the early 30s that he wasn’t as much concerned about the return on his money as the return of his money.

http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/IO+June+2009+Staying+Rich+in+the+New+Normal+Gross.htm

Will the US debt goes over 300% GDP? Do I have worry? Yes I do but let's hope the decline will be gradual and orderly. However, living in Asia makes me feel better hoping our currency will rise against them.

Am I getting complacent?

After I made a U turn from bearish to bullish sometime in March '09, commodities, emerging market and equities continue to race ahead. There are people caution us not to get complacent. Am I getting complacent? It's always good to check our thinking and mood, never ever trust yourself. The way I do self examination is looking at facts honestly.


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My simple reason was people are still fearful, instituition pros are still fearful though not overly feaful. Their asset allocation for equities have not reached 70-80% which is an excellent time to short stock. Cash level has not reached typical complacent level yet.

My past experience taught me I must buy when there is blood on the street. The second important lesson is continue to buy if I can find cheap stock(after Index goes up quite a bit(20% or more from bottom) though it is getting harder. The final stage, which is most dangerous stage when everyone is talking about stocks. If you have friends that are conservative and not buying stock now but they suddenly feel a lot more secure getting into buying stock, talking about PE 15 - 18 X is cheap and etc, that is the time we got to be very worried.

Goldman oil forecast

(Money CNN)Goldman Sachs (GS, Fortune 500) raised its end of 2009 oil price forecast to $85 a barrel from $65 and introduced a new end of 2010 forecast of $95.

"The recent rally in WTI (U.S. crude) prices is likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity," Goldman said in a research note.

http://money.cnn.com/2009/06/04/markets/oil.reut/index.htm?postversion=2009060408

Is it true that economic activity recovered? The signs are getting better.

June 4 (Bloomberg) -- The European Central Bank kept its benchmark interest rate at a record low of 1 percent today after first signs of an economic recovery emerged.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8B1TJc.u.As

June 4 (Bloomberg) -- U.S. stocks rose for the fifth time in six days as government reports showed the number of Americans receiving unemployment benefits fell last week while worker productivity increased.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQCvWVZ53mxI

I have no doubt that the economic had hit the bottom but the issue now is recovery rate.

Ah Long

(The Star)KUALA LUMPUR: Some 80% of the 870 cases involving loan sharks recorded by the MCA Public Services and Complaints Department since January last year involved habitual gamblers.

Department head Datuk Michael Chong said these gamblers were “defaulters” and not “victims”.

“By defaulting on their payments, their family members suffered at the hands of the loan sharks.

“These gamblers are defaulters. Don’t call them victims, they don’t deserve to be called victims. Their family members are the victims,” Chong told The Star yesterday.

He said most gamblers got into trouble with loan sharks after losing their bets on international football matches and other games such as roulette, and they needed to continue borrowing to recover the original sum.

“If he loses RM1,000, he will borrow another RM1,000 to recover the loss. When he loses that, he will then need to borrow RM2,000 to recover the original RM2,000.

“All of them never think. They only think of paying back their debts by winning from gambling,” he said.

However, Chong said most of the time, the complainants would not admit to being gamblers until they were coaxed or exposed by their family members.

He said the department had advised the complainants in 95% of the gambling-related loan sharks cases to “disappear and not return” until they had enough money to pay back their principal sum.

“In some cases, their families have disowned them for repeatedly getting into trouble with loan sharks.

“In fact, less than 5% of the cases we handled have been able to immediately and fully settle their principal sums,” he said.

I agree that these guys do not deserve sympathy. If this were to happen to my friends and relatives - brothers, sisters, father, mother, grand-father, grand mother, etc. I will not step in to help, simply because we cannot condone wrong doing.

There is a difference between a guy needs capital to earn a living (micro-credit) and a guy seeking an easy way out. Those small timers seriously wanted to start small new business will work damn hard not to default and keep paying back their principal. These group of people deserve assistance. I heard on the radio this morning the government considering setting up a fund to help, I think it's a waste of time. They need to get down to the root before jumping the gun.

Why am I not selling out my position ?

I have been reading other people views that record high insider selling, earning dilution by converting debt to equities and overbought conditions should invite correction. The question is how deep will the correction takes place, if it is shallow and going up very quickly, selling out now and not buying back fast enough will miss more gains. Worse still when it goes up a lot higher that trigger us to buy at higher price and correction sets in will cause us to lose money-lah. One interesting view by Marc Faber is this:

"I believe that a correction should unfold in the period directly ahead, but that the market lows we reached either toward the end of last year (in most emerging markets) or in March of this year (in most developed markets) should hold. Also, the correction I expect could take the shape of a sideward movement in the major averages, or even not occur at all. After all, I can assure my readers that there are lots of big institutions out there that completely missed the powerful rally since March 6 and are now nervously waiting for the market to come down. Should markets not correct on the downside, these investors could lose their patience and their sudden rush into long positions could lead to another stock market upside explosion."

By declaring my saving going back to $ 888 from $ 620 (see May 30 entry) is demostration of my conviction to hold a similar view.