Eating humble pie

I must say this weekend of mine was really fruitful i guess .. Stumble upon a few other blogs and articles in the papers and learn quite some stuff already. 1st of all i came upon a letter written to the Straits Times by Chua Soon Hock on 6 Jul 2007 in the forum. Should post here for my future reference.

HAVING made a living as a fund manager and trader for the past 25 years, I have seen the general investing public hurt numerous times when they invest aggressively near the peak of a bubble, whether in stocks or property.
Retail investors should adopt a very long-term horizon to benefit from the stock and property markets.

The starting point of major stock investment or purchasing a property for investment is important. Always try to start major investments during a recession, a global market crisis, a banking crisis or when nobody is interested in stocks, like during the Sars period.

The art of investing can be broken down into three quantitative variables of time, price and size. Investors should pick a ‘terrible’ environment/time when prices are distressed and commit big (but definitely without leverage).

The opposite is also true. In a very bullish, ‘good’ environment/time with high prices everywhere, investors should reduce the size of investments and ensure that whatever is outstanding is getting smaller and smaller.

Forget about wanting to liquidate all investments at the top of the market. It is an impossible task.

The basic idea is to invest aggressively (without leverage) near the bottom and get out when markets are euphoric, like now, even if they could go higher and carry on longer.

Global imbalances are currently at an extreme, making the environment ripe for a market crisis like Oct 19, 1987.

Markets (individual share and property) will go up and down over a long period of time, although the general stock index hides this truth as new, strong shares always replace old, declining shares over the years, giving you a misguided view that the index always heads much higher over time.

As Singapore markets become globalised with much foreign participation, Singaporeans would do well to be patient and courageous by investing near the bottom of the down cycle and selling to foreigners near the top of the up cycle and repeating this process.

If you have missed the huge bull market, that’s just too bad. Now is not the time to jump in aggressively as the risks are increasing exponentially.

Bull and bear markets always repeat themselves, just like summer and winter. Be very patient and do your homework.

You do not need to be a genius to make money in the markets. You need common sense, discipline and a clear long-term workable plan, without which the markets are like a hot fire and will burn fingers.

Chua Soon Hock

There has been a lot of news recently in the papers regarding stocks. Tink one or two days ago, an article was written in the New Paper regarding a uncle whom i tink is a retiree who plonked in $20000 into stocks and he has zlich idea on wat is going on in the market. He buy based on discussion with his frens and newspapers report. I been talking with my dad recently regarding the market and consensus is that literally everyone be it uncles or aunties know that the market is really way overbought at this moment but still $$ are plonked into the market. Reminds me of how the last phase of the bull market is described and that everyone in the public is vested. Greed is all around in the market be it in stocks or property sector. Perhaps one last piece of reli solid advice for me and that will be :

Be greedy where there is fear and be fearful when there is greed.

Perhaps at this moment, i am too being slowly consumed by greed. Can't reli help it when u see tat the stuff u been learning reli works in the market. Well, maybe it is a good ting that i can't be vested since i will only have funds after august. Hopefully, the bear market will start den but den i am gona graduate in 2 years time !! Later no job how sia ?? :-/


The second thing was that i stumbled upon another trader's blog at rallyartist.blogspot.com. It's reli a great blog since i learn abt how the BBs can make $$ from the market. Very interesting indeed. Haha ..

But the most important thing was his observation on the STI. He looked at the major trend and realised that even trendlines from a few years before are affecting the prices now since at this stage, prices repeatedly failed to break the trendline formed from a few years ago and that is very significant. There is reli nothing rocket science abt this cos it is just the drawing of trendlines but nonetheless it is someting to watch out for and maybe it's time for me to get the 10 years stocks data :) Just gota be as objective as i can and not let emotions decide my decisions.

Back onto the indices, today STI tested 3672 and failed to break through this crucial resistance, closing with a nearly shaven black candle with a high volume. From a rising bearish wedge to a probable head and shoulders, i wonder what can be nxt ? But as for now, it ain't rosy news. Dow is going to test the crucial resistance of 16383 soon and we shall see how it turns out bah. UOB Sesdaq made a new high today. For as long as i remember, penny stocks has been hogging the top volume list. That reminds me of blues chips and penny stocks take on rotational plays which is someting i learned abt and from now i will oso monitor the UOB Sesdaq too ! :)