Tuesday, August 9, 2011

The person to cure the US economic ails

We need someone like JP Morgan who has the guts to do the right thing and hardball Obama, Boehner, and all the other vermins to toe the line.

The only solution for someone with 14 -15 trillion of debt is

1. Raise taxes to the rich.
2. Cut indulgences, over generous medicare and social securities - just go back to basics.
3. Reduce big government. Starting with Obama - cut all government salaries by 20%.


The 2 Most Feared Figures In Finance

No. 2 - John D. Rockefeller
John D. Rockefeller may be the most terrifying figure in finance. He was the richest man in the world and still ranks as the richest man in modern history. His company, Standard Oil, controlled 90% of the American oil industry and was infamous for forcing competitors to bankruptcy and then buying their assets from their creditors. But the thing that made him truly terrifying was his absolute belief in what he was doing. Rockefeller saw cutthroat competition as a ruinous practice that benefited the consumers much less than it ultimately hurt business. Rockefeller saw greater profits and greater benefits could be achieved by the practice of "combination", now called "economies of scale".

Rockefeller is remembered for his hard ball practices of using the immense wealth of Standard Oil to cause train and barrel shortages that ruined his competitors and forced them to come to his side, but he should also be remembered for emphasizing research and development, reducing harmful waste and passing savings onto consumers. There is no doubt that his driving sense of purpose and the means he employed to achieve his ends were not all good, but there is as much to admire about Rockefeller as there is to fear.


No. 1 - J.P. Morgan
J.P. Morgan was a wealthy man, but not near the scale of a Rockefeller or even a Gates. What J.P. Morgan had more of than any other person on this list was pure power. During his lifetime it was said that God owned men's souls and J.P. Morgan owned the rest. The power that Morgan wielded owes as much to timing as to his personal attributes. Morgan was the primary banker for Wall Street, underwriting companies like General Electric and International Harvester at time when the American economy was getting ready to explode. At the time, a bank's reputation decided whether an issue would sell rather than the strength of the company's financials, and Morgan's reputation was gold.

The moment when Morgan was at his most powerful and terrifying, however, came during the Bank Panic of 1907. Morgan personally gathered all the financial and political movers at his mansion and forced them into locked-door negotiations to resolve the crises. The idea that the entire American economy relied on one aging banker to keep it afloat scared the government so badly that the Federal Reserve Bank was created to prevent a similar situation in the future.
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My Trading Adventure

Lesson from Teh.

During market panic / crash :- identify call warrants for capitulation trade.
Quick with volume & catalyst.

Wednesday, August 10, 2011

Waking up to a nice morning ... as DOW up 430 points!! Yeah ... many will be rushing back in to buy!! Well, dont worry ... many just sold their holdings and will be too fearful to move in yet. So, it will take a few days before they see technical-rebound and to convince themselves to buy?

We are always 'late' to act, whether selling or buying. Ever wonder why?

Normally, we see our stocks tank for about 3 days and down by 10%-30%(those buying speculative goreng stocks could have lost more!!) ... then, the PAIN is too much to bear or we are 'forced' to sell, we decided to cut it off. Selling last Friday when it dives could  have 'saved' us from big-huge losses as we could buy more yesterday!! No?

As yesterday, things go hay-wire ... SELL at any price and panic selling seen as many FINALLY releasing their positions after 3 days of painful dive. Well, of coz ... many staying sideline and these experienced investors came in to buy into markets after the three MEGA sales day!! We do our buying spree during these MEGA Raya and Merdeka sales, ok?

Not only these aunties-uncles, novices-newbies will not be buying(selling instead), they will only come in AFTER the rebound confirmed ... after 5 days of long white candle sticks seen, after KLCI rebounded say 50points. By then, it is time to sell our positions. They are always 'late' and will start to wonder if the market is always against them?

EASIER SAID THAN DONE.

I alerted 3 of my turtles that it is time to BUY. Do you think it is advisible to ask anyone to catch a knife? The waterfalls could easily drown us!!

I was collecting UEM-ce and WCT-wb. Yes, I will be happy to grab anything in my list as it is a MEGA sales afterall. Last month, if you tell anyone(novices) to be patient ... wait for mega-sales to buy, they will wonder why you are so selfish!! They will questiton and ask WHEN the mega-sales will be, as if someone know exactly when. At the moment, it is in everyone's mind if the market will rebound, say above 1500 level again. Hmm ... what do u think?

What do we buy if we are going to buy later? As you could see, I was VERY hardworking these days ... I have even shared with all those waterfall stocks that I liked with given RSI. Yes, I like those good oversold stocks as their rebounds is very likely.

TEH : Ever notice why I am extremely busy when market tanking? I have learnt these lessons and it will do me well in future, when I retired and no longer trading(I prefer to teach/coach anyone about trading then). I will only move in hugely when I smell opportunities.

Am I pointing to a buy today? Well, I bought these high risk UEM-ce and WCT-wb. Am I asking u to punt into what I am punting? You will profit from all the works I have done here, by simply reading these few lines(here and there), but do u appreciate many of us bloggers giving free information, free guidance and free learning space? Do you think you want to learn in the first place?

TEH : I checked that my readership have increased substancially BUT my ads earning dropping compared to last month. Know what I mean? Hehe

Look into your greedy heart, look into your self-centered personalities ... then perhaps, you could understand why you are being ignorant and still losing money. All you want to know is ... THIS ONE CAN BUY AR? or THAT ONE CAN SELL AR?. Pause for a while ... do you really think anyone could advise you on that? When will you ever learn? Do you bother to learn? Hmm ...

To learn, one needs to be HUMBLE. We need to be open minded. To progress, we need support from others as who are we without them?

Without these support, I dont know if my blog could last another year? Haha ... well, I will still write even if I dont have readers. Do you believe how stupid I am? This blog is my space to 'voice out' my opinions, views and experiences. It never meant to attract larger readership base, anyway.I seldom promote my blog simply because this is NOT a stock-picking blog blah blah ... do you want me to re-wind? Haha.

Yes, this blog is 3-years old ... this is my personal platform. Do you think many bother much? As I said, while I have few good-loyal and appreciative readers, I do have many more(majority) who will jump in-out-in-out simply to check if I punted into anything interesting for THIER quick profits(if they know-how). I have tonnes of KLSE-punters hanging around to see what call-warrants to gamble-on. It is purely gambling mentality and NEVER occur to them why they are STILL losing money? When they lose money buying into those written here, they will start to 'curse' me(even silently cursing me ... haha) but if they have profitted ... do you think I benefit anything from their profits? Hmm ... how about you promise to 'donate' some small amount to charity if I do some analysing for you or learning from here?

TEH : To my 9 new turtles who might be reading these lines ... I hope to guide well. But, learning takes TIME, efforts and humble open-mind. If 'ego' in us, we could not progress well. Do the homework given as ... yes, it is tedious. Even after doing so much of work, we still might 'lose' in our trades. Ever wonder how the other egoistic-ignorants, 80-90% of them in markets losing money?

Bobby Brown - Every Little Step



Note : Listening to Bobby Brown's song doesnt show that I am old as I like the 80s or listening to Eminem's songs doesnt make me sound young!! It is these kinda of stereotyping mental-block in most of us that deter us from doing what we want to do. Do u want me to share with you the "Monkey sees, monkeys do" experiment again? hehe

Ok ... it is almost 7am. While many still sleeping or preparing to go to work, I m writing a post here to share ... before another crazy busy day till night.

Yes, these few days I will have night classes! Hehe.

If one wish to 'book' me to teach him/her personally about trading/investing or stock-market talk, please contact me and let me know. Yes, I do 'personal tuition' at nights!

With that, happy buying ... as I am going to sell soon once those aunties-uncles start swarming in. BUY BUY BUY ...

8.50 am : Dont know if my queue for UEMLand-ce to buy at 0.08 will be done tho I am one of the first to queue there. Hmm ... buying is huge coming in, so I m queueing to sell half of my holdings at 0.095(buy at 0.065).

9.15 am : The whole platform OUT OF SERVICE. Haha ... too many buyers coming in!!

TEH

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Thursday, March 3, 2011

Mean Market Performance

By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — Warren Buffett’s annual letter to Berkshire Hathaway shareholders is probably the most widely read commentary on Wall Street of the entire year.

Strangely, though, in all the ink that has already been spilled since Buffett released this year’s letter this past Saturday, I’ve seen no mention of what I think is perhaps its most profound investment lesson: Long-term returns in excess of around 20% annualized are next to impossible to achieve.

Overlooked as this investment lesson is, though, it jumps out from the very first page of Buffett’s letter, where he reports the growth in book value of Berkshire Hathaway (BRK.B 86.60, -0.10, -0.12%) since he took over the company in the mid 1960s. Though Buffett is widely recognized to be the most successful long-term investor alive today, that growth rate from 1965 through the end of 2010 was “just” 20.2% annualized.

That’s most definitely nothing to sneeze at, of course. The S&P 500 index (SPX 1,331, +22.53, +1.72%) over the same period produced a dividend-adjusted return of not even quite half as much — 9.4% annualized. Cumulatively (on an un-annualized basis), these two rates of return work out to gains of 490,409% and 6,262%, respectively.

Yet, even though Buffett’s return has produced riches beyond the dreams of avarice, far too many investors won’t leave well enough alone. And who can blame them? There is no shortage of advisers and unscrupulous marketers who regularly promise returns several orders of magnitude higher than 20% per year. Claims of 100% per year, and more, are commonplace.

My advice: You should run, not walk, the other way from any adviser making performance claims of that magnitude.

Think about it this way: Whenever you come across an adviser making performance claims this high, you know one of three things is going on:

The adviser in question is a far better investor than Warren Buffett

The adviser in question is lying

The adviser is accurately reporting his historical performance, but it was produced over such a short period of time that regression to the mean will quickly cause his return to come back to Earth.

As for Possibility #1, I’ll leave it to you decide the likelihood that the ad you’ve received in your email inbox is from a superstar adviser who is genuinely better than Buffett. If your answer is “yes,” I have a bridge I want to sell you.

As for Possibility #2, I know you’ll be shocked to learn that lots of advisers regularly lie about their performance. If you don’t believe it, I want to sell another bridge to you too.

Possibility #3 is more insidious, since it enables an adviser to imply a falsehood while nevertheless telling the truth. To appreciate the role that regression to the mean plays, consider the evidence in the accompanying table.

Length of period Annualized return of top investment newsletter over this period Annualized return of top mutual fund over this period
Last 1 year 85.2% 76.4%
Last 10 years 21.7% 29.7%
Last 20 years 19.3% 15.6%
Last 30 years 15.3% 14.5%
The data in the table for investment newsletters, of course, comes from my Hulbert Financial Digest monitoring service. The mutual fund data comes from Morningstar and Lipper.

Notice the remarkable similarity in the pattern in both columns. The degradation in both series of returns, as the time period lengthens, is almost identical.

Luckily, you don’t need to determine which of these three possible factors is at work when you receive a performance claim well in excess of 20% annualized, since your proper course of action is the same regardless.

To do anything else would be a triumph of hope over experience.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
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