Turtle, selling again?

Yes, I am selling again. It does not matter to me whether the market tops out tomorrow, next week, next quarter -- I will not regret this decision. No one knows tomorrow.

I have seen it so many times. It's hard to quit when you see the market continues to go up every time you sell something. That is why contrarian investing is so difficult. You have heard this before

Buy low, Sell High.

In reality when you buy low, it may go lower. Then you got smarter, buy at the first higher higher, etc.........that will make you hesitate and wait and wait till it almost tops out.

In exhaustion rally, it will tend to frustrate you. A lot of people keep buying on dips. Every time you sell something, the price will continue to run. Then you regret, you jump in and buy. That is why people ended up

Buying high and selling low.

When you are middle of it, it's hard to see whether today is a peak. A mistaken peak interpreted as a low will cause people to over stay in the market. The worst is they don't reduce their exposure and get 100% invested. When everyone rushing for covers, exiting a 3" door, you know where I am leading you.

The biggest mistake a person can do is having NO CASH when the market corrects/crashes. A lot of questions are lining up to shoot me. What if the market continues to move sideway to allow the earnings to catch up. What if foreign investors come back. What if syndicates decided to play up the penny stocks? What if liquidity has no where to go but stock markets?

It's all possible to those IFs questions. KLCI 1,500 selling around historical average 15X is not very compelling. Don't we think chances of we see KLCI 1,200 is higher than 1,700? Seriously.

Sold MUI IND

Sold 10,000 shares MUI IND @ 0.26/share

KLCI = 1513.

Liquidity and value investing???

I did not realize that I did not post for almost a week. Writing ideas almost dried up. Thankfully a reader ask me this question.



To answer your question honestly. I don't know the answer especially from technical stand point.

I do understand the concern of the question especially those investing based on value investing principle. Patience is a virtual but sometimes it will cost an investor too much. Let me give you an example on a stock that I wrote earlier about Shangri-La.



Shang has been moving in a trading zone for the longest time after the dot com bust sold down! Six years, your money trapped for six years if you bought after the dot com bust!

If you apply on criteria of earnings quality, brand name, management, etc.......you will have every box checked. But why the hell the price moving sideway just like that?????

The stock is also owned by reputable institutional investors. See this?



Suddenly the stock would just shot up from 2006 to 2008 with increased volume? It was also breaking out from the trading zone?

Two simple explainations:

(i) general or overall market is approaching euphoria thus all boats got lifted up.

(ii) general economy booms -- earnings will keep beating expectations thus, higher and higher valuations tagged.

If you are looking for something actionable. Here is another one. TDM is a value stock that made a new all time high. The trading volume is pretty good. Plus this stock has what I called Mr. Koon's premium.



Caveat: internal momentum of KLCI is weakening. If you want to punt on TDM, please don't curse me when you lose money because you refuse to cut loss when you are wrong.

THIS IS THE SINGLE MOST IMPORTANT KEY SUCCESS FACTOR OF A MOMENTUM PLAYER. IF YOU ARE THE TYPE THAN CANNOT CUT LOSS.

CUT LOSS!

CUT LOSS!

CUT LOSS!

I REPEAT. IF YOU CANNOT CUT LOSS. DON'T TRY THIS METHOD.

I earned my readers trust and loyalty because I made calls when the stocks are depressed and not when they are hot.

This is my simple view of this issue. We all can argue all we want about catalysts but the loudest of all is breaking a new all time high with good volume. Hope this helps.

P.S. I invite readers to post questions to help me a bit. But you should also know that the answer you see may not to your liking but I will assure you a candid answer. Thanks. :)

Stock markets up despite of bad news....all clear to jump in??

I reflected over the last two days during the Chinese New Year holidays on the market directions.

The European headlines faded from the front page despite of Greek bond write down negotiation impasse.

The Italian 10 year bond yield has receded from its all time high, for now.



IMF said they are cutting global growth forecast from 4% to 3.3%, the contraction is mainly coming from the Eurozone. 3 plus % is still a very good number.

Even the bearish guy like Hussman is changing his tone that at least taking some of the hedges off in view of economic data stabilization. The main logic behind that is formed on the basis of central bankers intervention.

http://hussmanfunds.com/wmc/wmc120123.htm

The old argument of relative return is coming back. Equity yield is more attractive than government bond yield.

That will encourage speculators to come to play, at least at the very short term. The Dow Jones Industrial Average is about to challenge the last year's all time high. The strong counter-rally is a response of the stock markets acknowledging they were wrong. The world did not go into abyss and Lehman II scenario has been taken off the table, for now.

Even Dr. Doom, Marc Faber, echoed this view.

Stock markets have already discounted "some very bad news" and there is no reason to fear stocks will sink, despite gloomy prospects for the global economy, Marc Faber, publisher and editor of the Gloom Boom & Doom Report, told CNBC on Thursday.

"My view is simply: relax. I don’t think that equities will collapse. I think we have major support going back to August 2010 when the S&P was at 1010," Faber said.

Just over a year later, the S&P briefly dropped to a low of 1074 on October 4, 2011, he said.

"We have a lot of support around 1100, and if the S&P drops 200 points, I guarantee you the Fed will come in with QE3 and QE4 and so forth," he said, referring to a next round of quantitative easing by the Federal Reserve.

http://www.cnbc.com/id/46055852/Marc_Faber_Relax_Stocks_Will_Not_Collapse

The cyclical sector like semiconductor, in many views, is likely to turn up due to low inventory level.



It was reported in the Star this morning too. The chip sector expect to recover by Q2 '12.
http://biz.thestar.com.my/news/story.asp?file=/2012/1/25/business/10263369&sec=business

Am I ready to change my bearish stance? Not yet. Being bearish and bullish at the wrong time can be costly in a side way market. It has cost me 10 points gain when I turned very bearish in October, I was precisely wrong when I should have stuck to my bullish stance. Now that it has gone to the top of the next resistance, I should continue to maintain my bearish stance. I will move some money out in the next sell off.

Chinese New Year reflection ..... taboos

It's a long posting but mostly re-prodution of other people's works but with interjection of my thoughts. You may want to make a cup of kopi 'o' or grab a bottle of Tiger or Guinness Stout, before you read on leisurely.

Some superstitious things stick with you so deeply even though you know it's silly. It's funny that all the eight taboos described on this web page http://www.chinaculture.org/gb/en_focus/2005-01/24/content_65330.htm were instilled in us when we were young.

The events that occurred during New Year's Day may impact your life for the rest of the year. Be careful in your actions. Certain precautions are taken to insure that the New Year will be a good one.

1. The entire house should be cleaned before New Year's Day. On New Year's Eve, all brooms, brushes, dusters, dustpans and other cleaning equipment are put away. Sweeping or dusting should not be done on New Year's Day for fear that good fortune will be swept away. After New Year's Day, the floors may be swept. Beginning at the door, the dust and rubbish are swept to the middle of the parlor, then placed in the corners and not taken or thrown out until the fifth day. At no time should the rubbish in the corners be trampled upon.

In sweeping, there is a superstition that if you sweep the dust and dirt out of your house by the front entrance is to sweep away the good fortune of the family; it must always be swept inwards and then carried out, then no harm will follow. All dirt and rubbish must be taken out the back door.

2. Shooting off firecrackers on New Year's Eve is the Chinese way of sending out the old year and welcoming in the new. On the stroke of midnight on New Year's Eve, every door in the house, and even windows, have to be open to allow the old year to go out.

3. Nothing should be lent on New Year's Day, as anyone who does so will be lending all the year. All debts have to be paid by New Year's Eve.

4. Everyone should refrain from using foul language and bad or unlucky words. Negative terms and the word "four", or "si" in Chinese which sounds like the word for death, are not to be uttered. Death and dying are never mentioned and ghost stories are totally taboo.

5. Hair must be cleaned and set prior to the holiday, for to do so during the New Year season would invite financial ruin. On New Year's Day, hair should not be washed because it would mean washing away good luck for the New Year.

6. Care must be taken not to break any dishes or other things on the first day of the year.

7. The use of knives and scissors -- indeed any sharp instrument -- is to be avoided, for these things could augur bad luck in the coming year.

8. Wear brand new clothes -- preferably in red. Children should wear new clothes and new shoes. Red is considered a bright, happy color, sure to bring the wearer a sunny and bright future. It is believed that appearance and attitude during New Year's sets the tone for the rest of the year.

When we were young, we will surely kena wallop if we break any of these taboos. As we get older, it's funny that certain memories of elders are coming back. You miss them. In fact you feel like telling those stories that define who chinese are.

The old folks were thin strand that bond all of us. They were the reason, of no matter how far and difficult, all of us will make efforts to re-group. The empty wooden detached house will filled with smell of joss sticks and laughters. There was the place we learn about risk and money management. We were taught not to peep over our elders' cards or touching their shoulders while they were playing cards. Bad things will happen to us if we do that.

The aunties will exchange stories in the kitchen. They teased each other. Some are more guarded than the other especially the rich unties. I missed the kitchen with a big wok and the smell of burning rubber woods.

The common thread of DNA running through the whole family is money. Everybody talks about money. These folks were not educated, largely because grand pa and grand ma could not send them to school. They all will advise us to study hard so that we all can sit in an office. The life will be less "bitter". You get to enjoy air con and just sign a few papers a day. Those were their simple and naive impressions of a white colar job. Naive they may be, their sense of honesty and willing to sweat will beat anyone of us hands down.

They were willing to take a small job with paper thin profit and work almost 18 hours a day. They don't take a single day off during the year except in Chinese New Year. Many of these values were instilled in our godfathers in this country like Robert Kuok, Lim Goh Thong, Yeoh Tiong Lay, etc........The rise of these godfathers created a lot of economic value for people. But things have changed. That got me thinking what will future holds for our next generation?

There is another unspoken taboo....

Written by Dr Lim Teck Ghee

“What Chinese poor????

Soon after I returned to Malaysia in late 2005, I met with a former president of the country’s major Chinese party in his office. During the discussion which covered a range of issues, I expressed my concern at the failure of the Chinese political leadership to deal effectively with the socio-economic problems and challenges that the community was facing.

I had known the leader since the 1970s but especially in the late 80s and early 1990s when I was a panellist in the 150-member National Economic Consultative Council (NECC) which had been set up by the then Prime Minister, Dr Mahathir Mohamad, to come up with a post-1990 economic policy to replace the New Economic Policy (NEP).

The response of the former president to my concern shocked me. Besides defending his party and his leadership, he declared that the Chinese were very lucky to be able to live in Malaysia. “Where else in the world can you find a simple char koay teow seller become so rich and drive a Mercedes!??? was his rejoinder.

This view that the Chinese have done very well for themselves – and by extension, do not require assistance from the Government – is not uncommon. However, it is a gross generalization and erroneous on several counts. Taken to its logical end and juxtaposed with the fact that many of the country’s richest individuals are Chinese, such a simplistic view has provided the underpinnings for the racially biased public policies pursued in a wide range of sectors and over such a long period of time in the country.

Off the public radar

Let us consider some of these facts and figures of the Chinese poor, disadvantaged and marginalized.

Firstly, many of these Chinese individuals and households do not appear on the government’s listing of poor Malaysians because the Government has used an unrealistically low poverty line income to decide who comprise the poor. Should there be a readjustment of the poverty line to a more realistic figure, it is likely that several hundred thousand Chinese households (as well as a larger number of Bumiputera and Indian households) will fall into the ‘poverty’ category.

Secondly, income distribution within the Chinese community is worsening. In fact the gap between the Chinese poor and well-to-do has increased in the last two decades, for which data is available. According to the Gini coefficient of income inequality, income inequality within the Chinese community has increased from .423 in 1990 to .434 in 1999 and .446 in 2004. Incidentally, this is the same for all the communities, including the Malays.

The worsening income inequality points to an entrenched and worsening poverty problem within the Chinese community that is not discernible if we simply rely on the conventional statistical indicators used by Government.

Excluded from NEP

Why is Chinese poverty so entrenched and intractable? The answer is that, for the most part, the Chinese poor and lower classes have not benefitted from the NEP and other national policies in the way that the Chinese elites or even upper middle class have. Consider the following

1. They have not been targeted by any of the government’s anti-poverty programmes.

2. They have been disadvantaged by lack of mastery of English and Malay.

3. They have educated their children in Chinese schools which have been the victims of unequal treatment. More than a quarter of Chinese school kids drop out before the age of 17 with many coming from the poorer achieving and less endowed Chinese medium schools which we seldom hear or read about.

4. A large number of them live in New Villages or in geographically remote rural areas which have been cut off from the enclave of affluence located in the main cities and in the Klang Valley area.

5. Many come from the agricultural sector and are vegetable gardeners, fruit farmers or fishermen or engage in agricultural services. Unlike their Malay counterpart rural poor, they have had limited access to Felda, Felcra, IADPs and other federal and state schemes that have reduced landlessness and indebtedness and provided access to housing, infrastructure, utilities as well as enhanced incomes substantially. Even worse, they have been denied their legitimate land rights so that many remain squatters or operate on TOLs or short-term leases.

The recent report that the new MCA president, Chua Soi Lek, intends to meet with the Perak Menteri Besar, Dr Zambry Abdul Kadir to discuss matters pertaining to squatters, land premiums and discounts to new villagers and the issue of limited allocations shows how ‘lucky’ the Perak Chinese are to be able to live in the state and the ‘tremendous’ advances they have made after 50 years of Barisan rule.

6. In the discussions on the country’s brain drain and loss of talent, much has been made about the out-migration of Chinese educated and professionals. In fact, if the proper surveys are ever carried out on out-migration from the country (according to the Deputy Foreign Minister in Parliament recently, 304,358 Malaysians migrated to other countries from March 2008 till August 2009 compared with a out-migration figure of 139,696 in 2007), I will not be surprised if just as many less educated poor and lower middle-class Chinese are found to have left the country because of poverty and lack of opportunities for themselves and their children.

Chinese SMEs and other towkays

Much has also been made of the prosperity of the Chinese that comes from their domination of the small and medium enterprises (SMEs) in the country. However, not all SMEs are prosperous or can provide the secure and sustainable livelihood and incomes that others who are ignorant of the real conditions of these enterprises seem to imagine is the case with every SME.

Most Chinese SMEs are family-run businesses that are barely able to scrape a decent living through heavy self-exploitation of family member and extended family labour. Often working in dangerous and appalling conditions, they are ill-equipped to compete in an increasingly competitive and globalized environment.

The reality is that besides continuous harassment from government officials and politicians bent on extracting coffee money and beating them down for non-compliance with various local council rules and regulations, many SMEs are trapped in low productivity operations and lack access to technological know-how, larger markets and R&D capacity.

In the near term as regional and international competition heats up, many SMEs face a bleak future and are likely to go bust.

These small fry ‘towkays’ of micro-SMEs (over 90% of the SMEs in the country belong to this group) and their poorly paid employees, eking out a modest living in the country’s workshops and squatter areas, however, have never been on the government’s radar screen, except perhaps for taxation purposes.

How much (or rather little) budgetary support and other assistance has actually reached the SMEs – directly and not through proxies or parasitic agencies – in the last few Malaysia Plans would be an important question for the government to respond to.

Members of the National Economic Advisory Council (NEAC)will find that there is a whole generation of bad policy planning and implementation that needs to be undone with regard to the SMEs if they are serious about the objective of revitalizing this sector in the 10th Malaysia Plan and the New Economic Model.

No social safety net

There is one more important consideration that is seldom discussed when the issue of Chinese socio-economic well-being is raised. This is that arising from their self employment or work as employees in SMEs and the informal sector, only a small proportion of Chinese households are covered by the social safety net for health, insurance and old age that comes with employment either in the public sector or with formal private sector employment.

This absence of participation in a social safety net will increasingly make itself felt on the future well being of the Chinese as the community ages rapidly and with the loss of traditional safety nets provided by the extended and large nuclear family.

The trend of Chinese vulnerable elderly who are either abandoned in old folk homes or live in miserable conditions on their own is already gaining speed. This trend is unstoppable without major changes taking place within the community and at the macro level where the state is the key player.

Malaysia’s present, future and past

Will the ‘1Malaysia’ concept and New Economic Model remove the blinkers that stand in the way of assistance and resources being provided to the Chinese disadvantaged?

Will the Prime Minister’s promise of raising income levels of all disadvantaged and marginalized groups be kept? Will we see merit-based, transparent and needs-based policies targeting the bottom 40% of the country’s income strata, irrespective of race and region, implemented?

We will have the opportunity to assess if this new vision of development for the country is more political rhetoric or a genuine path-breaking initiative soon.

As for me personally, I am not so sanguine. I was a member of the five- person team that finalized the NECC report which was presented to the government after more than two years of acrimonious debate. The major recommendations of the NECC to dismantle the NEP were never implemented. The NEP remained in force for another 20 years after it was supposed to have ended in 1990.

Will history now repeat itself again?

http://english.cpiasia.net/index.php?option=com_content&view=article&id=1904:chinese-poor-and-lower-class-in-msia-how-well-off-are-they-&catid=141:lim-teck-ghees-contribution&Itemid=93

Like that also can-ah?

Rent a boy friend or girl friend during Chinese New Year? I was not sure whether to laugh or to shake my head. Like this also can! I suppose anything also can in China.

BEIJING - Are you in a relationship?

That's probably the most embarrassing question single people get asked during Spring Festival.

As young urbanites head back home for family reunions, their parents, especially those in small towns and rural areas, will try to talk them into, even pressure them to get married as soon as possible. According to Chinese tradition, parents of children of marriageable age who remain single lose face.


A girl cleans her boyfriend's ear in the waiting hall of a long-distance coach station in Yangzhou, Jiangsu province, on Tuesday. [Photo/China Daily]

To deal with the insistent parents, many single people find a simple solution - renting a girlfriend or boyfriend. This year, micro blogs, online shopping sites and group-buying websites have become the platforms of choice for tech-savvy young people to look for the right co-actor.

Search for "renting a boyfriend/girlfriend to go home during Spring Festival" on taobao.com, China's largest online shopping website, and 64 online stores will surface offering girlfriends for rent who can accompany the buyer back home during Spring Festival. And there's no shortage of men - 444 stores offer boyfriends for rent.

A 24-year-old man surnamed Chen is one of those who will be a temporary boyfriend for a price. The stock dealer left his village in Hunan province two years ago and is working in Shenzhen, Guangdong province.

Chen began offering the service two months ago and has already made three deals. He listened to his clients' worries and accompanied them to parties with friends. He might have to comply with sudden demands for hugs and kisses.

Chen said he expects brisk business during the Spring Festival. More than 20 women have contacted him, showing interest in his service, even though it costs 500 yuan ($79) a day.

Chen's got his inspiration for the business from his own experience of being urged to marry. People in rural areas usually get married younger than those from cities. Though Chen is still in his early 20s, his parents are busy arranging blind dates for him.

To avoid dating arranged by parents during Spring Festival, he has decided not to go home this year.

In his opinion, it's a win-win deal if he can rent himself out as a temporary boyfriend. "My customer can be freed from her parents' babbling about finding a boyfriend," Chen said. "I can make some money and have a warm festival instead of spending the long holiday alone in a city away from my hometown."

To assure customers of his sincerity, Chen will arrange face-to-face meetings in a public place and show them his ID card. Sometimes, he will also request the potential client to produce an ID.

"I'm also worried that I may get cheated or run into danger. After all, I have to travel to a new place together with a stranger," Chen said.
Chen is proud of his "work ethics".

"I'll turn down the deal if we don't look like a good match after seeing the customer's photo and talking to her. Because it would be impossible to convince her parents," said Chen, who is still choosing from nearly 30 potential clients.

Serena, 30, who prefers to give her English name, said on her micro blog that she wants to rent a boyfriend who can accompany her home and have dinners with her parents during Spring Festival.

Serena, a white-collar worker in Shanghai, sees nothing wrong with renting a boyfriend. But she said she has turned to this "troublesome" method only because pressure from her parents can accumulate to become unbearable.

"My parents may keep asking when my 'boyfriend' and I plan to get married after seeing the 'boyfriend' I rent. And they will be looking forward to meeting him next Spring Festival. It's unrealistic to rent a different boyfriend every year," Serena said.

Meituan.com, a group-buying website, launched a drawing on Jan 11, and the prizewinner can go home with a single employee from the website on a trip home sponsored by the website. More than 150,000 people have entered the drawing. A winner will be chosen on Friday.

Xu Jingxi contributed to this story.

Should we invest outside Malaysia? ...... Part II

People who want to manage their own money like to take control of their destiny. They don't trust the fund managers. They think fund managers are making themselves fatter each year while fund investors remain bamboo thin. I agree with those sentiments but I won't go into bashing fund managers on Monday morning. I think you can do a good job for that. Three or four important concepts to remember when investing in mutual funds in general. It's applicable to foreign fund investing as well.

The first concept we got to differentiate is fund performance vs investor performance.



A fund performance is calculated based on the date the fund was launched. The fund can be around for 10 years in this example and they can claimed that they have superior long term performance of how they can return RM 2,500 if you invested with them an initial sum of RM 1,000, roughly 9.6% CAGR. That sounds good. No dispute -- damn good in fact. Don't forget that if you invested with them when the fund was 8 years old with NAV of the fund was RM $ 2,300, your CAGR return is only roughly 4%. How come? 9.6% is a fund manager return and 4% is an investor performance. The base of gains/losses is set at the date of fund launching date for a fund manager. The date of investor making a purchase and gains/losses calculation belongs to his/her performance.

What I'm saying timing is everything. Timing is very closely related to sentiment. Most of us like to chase the girls with red mini-skirts -- hot. Well, who doesn't ???except you need to pay the price for it. I suppose no further elaboration needed with this visual.



Buy into foreign funds have no difference when that country or investment concept is depressed. China big cap funds for example are clearly very undervalued now except it is very testing because your money isn't growing! Do you dare to do dollar averaging now?

The second concept is diversification. Diversification is for birds, Warren Buffett would tell you. I would agree to certain extend if you are really super-competent in your area. Most of us will need to be humble, accepting that we score C across many categories. We need to diversify a little bit to prevent us making stupid mistakes. The rule of diversification is to make sure low correlation with what you are holding now.

The third concept is asset allocation. How much do you want to allocate for foreign assets? Personally, I have 80% invested in Malaysia and 20% invested in foreign mutual funds or ETFs(some sort of mutual funds that mimic an index).

The forth point is forex. Whether we like it or not, we need to pay attention to this. I was one of those who got impatient to venture out when our government liberalized the forex control. The feeling was like a bird being freed from a cage. It's the same reasons-lah: hopeless government, expensive Malaysian stock market, better investor protection, boasting about my investment skills, ego stroking, etc........A lot of my returns were eaten up by forex loss. From RM 3.80 to 1 USD to RM 3.05 to 1 USD, that and initial loading fees already put me in disadvantage situation. I do not think I lost money but after spending a lot of time and efforts, it's break even that I got forced me to be more realistic.

As usual, I hope my brutal honest views can help you a bit in your deliberation. I certainly have no intentions to put anyone down except force everyone to be naked in front of a mirror to make an honest assessment. After you have done that and if you think you are fit for it, don't hold yourself back. Just go for it! Happy investing and good luck!