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things every retail investor/trader should know

hey livermore, thanks. :) always appreciate your opinions. :)

commods/infrastructure: not necessarily.

commodities are meant for export market. they are the raw material which people import, process, and create finished products to export. the biggest export country to which most Asian countries send to is the US, which is due for a prolonged recession. It is for this reason i am bearish on china plays too.

Those talking about china's spectacular growth and domestic demand, don't have a real handle on the numbers. The fact is that china's domestic demand cannot make up for their slowing exports to the US. ie, China's growth is slowing because US is slowing consumption.

infrastructure however, may be meant for domestic. The things that people need, irregardless of recession. Things like roads, railways, telephone lines.Office spaces. Steel. That will in future be the hardware for growth. ie, critical infrastructure.

ie, within a one-two year timeframe, if what you are betting on is a US recession, then it points to commods down.

If what you are betting on is a US slow recovery, it is still commods down.

So here's an interesting question for people to consider. If it is a global recession now, and you have cash and reserves (as asian countries do), what would your next step be?

Increase exports, or scale back? And if you scale back, what will you put the money to, in preparation for the future?  

Isn't it *logical* to spend the money to improve the hardware of your country. So that when money markets unfreeze, the foreign investment dollar is attracted back again. Isn't it the very Asian thing to do. (eg, in a recession, when most are jobless, what do a lot of ppl do? Go for further degrees. Why? To upgrade themselves, so that in future, they have an edge in the market. Now apply this same logic to the stock market.)

very long term, of course, commods will go up again. But before that, in light of logic, how much further will it fall? Crude is tipped to fall to 70-80. CPO will definitely follow. A further 25% at least, in my estimates.  The baltic index (key measure of commods export, hence growth) has dropped 70% from its peak this year. What does the trend say?

In other words, commods are a growth play. Infrastructure, however, is a value play.  

And this is the difference on FA. The charts bear it out. We all know the classic chart pattern of a growth play. I have never seen one that deviated.  

edit: i should also note here that i'm bearish on gold currently. it's likely on its last run.

 

Hi Elf,

I like your blog. Your views are always interesting and sharp.However I differ from you on the commodities theme. In the long term, I still feel commodities would be back on the uptrend due to a growing world population. I remember reading that you echoed the same view as me on infrastructure being good for long term. If that is the case, then commodities should be the same. Infrastrucure and commodities go hand in hand together. 

 

The time will still come when all will be afraid of stocks.

ie. rather than 'buy during panics', many will panic if they hold on...

forex play is much more enjoyable...  

 

Elfinchilde, 

I can't dance as well as your wootie guy ---->              


 

I did intraday scalps here and there today, avoiding keeping positions overnight (or over the Hari Raya Holiday tomorrow). Not that I am a Muslim, but the uncertainty of the financial crisis still lingers on, god knows what will happen next.

The probability of the Dow trading in the positive territory tonight is quite high though.


 

 

hi elf, gap up for the below mention counters

sci, ocbc, capland and sgx. let's see if it is

is for today, or anticapating on coming thur,

, care to elborate after your good rest .. thanks.

 

 

 

and the day's done. we closed +4.01. gap up taken. HSI closed +135, btw.

capland managed to gap up too. not a bad sign for this poor baby.

now it's left to the rest of the days.

i need to sleep. watched the DJIA to its close yest and woke up early to fish this morning. tired liao.   

byes, folks.

 

Haha Elf, yup can feel a bit of adrenaline rush. The candlesticks, price/volume and williams combined are rather interesting and powerful. I feel myself tilting about 10% more towards the TA camp heehee  Quite unbelivable yah, at close of bell, we are at STI 2365, AND actually +4 pts gains despite the DOW 700 pts plunge last nite. Yes, the gap has convincingly been closed.

ahhh... now to go jogging ... bye for now

 

 

eh, relax lah tradechancellor....don't get too excited....hehe. hope you're applying well what i taught? cool seeing it live eh? :)

back to biz:

i suspect there may be gap ups after the closing bell for some counters. amongst them: sci, ocbc, capland and sgx. let's see if it is.

 

5mins from finishing line. STI now 2353. -7 pts in neg land............... hold your breath............

 

Yes, yes, nearer the finishing line now....STI 2355. Only -6 pts in negative territory. 15mins more!!!!!!!!

 

Thanx a lot Elfie. What an exciting day!! Thank God I'm on leave to see this action!! Yup, will wait pateiently for the recovery that may take years  heheh btw, STI nw 2356 pts. Only -5 pts in negative territory. 25min more to goooo!!!!!!!

 

lol, tradechancellor, i see you're as excited. :P

as a techie, it's a solid key reversal though, which is why it's exciting. how often can you see the STI drop 100 pts and reverse the entire loss? This is what i was posting about earlier in this thread, as well as in my blog, about why a strong case for bottoming can be made.

Note tho, that even if we have bottomed, recovery can still take years. So let's not be delusional and scream for bull. The bull years are gone, let's face that.

Window dressing: depends. you really need to sort out the lot. If you know what you're buying for, risk is lessened. ie, short scalp, or longterm hold? Why were they buying? It's a mixed board, so i really can't speak for all counters.

Either way, if you'd manage to scoop near bottom today, your actual risk is actually low. eg, If your risk/reward ratio is 2: 1, it means you can afford to lose 50% of your trades, and you'll still be positive.

This is all part of money management and portfolio strategy.

where i moved my funds to. shh. check your PM. :P   (and pls, don't just follow....)

colorado      ( Date: 30-Sep-2008 16:11) Posted: I wish I can tell you I am laughing to my bank but it is not to be. I just cut loss on my UT and have been sidelined for stocks cos it appears to be downtrending.  Thought to let the dust settle first before I enter slowly. I was actually looking at OCBC with the intentions to buy in.  When I next look at my screen, it's climbed so much so I missed the boat.  A few things to check with you. Since the window dressing is done for Q3 today, won't that mean selling on Thursday?  If we buy in today, won't we be taking a big risk since tomorrow is a holiday and the bailout package did not pan out?  I'm still trying to understand the whole dynamics .... :) Counters like STE, UIC and those that you mentioned are still above their NAV so how did you manage to move so much of your funds?  Where to?  Thanks Elfie, you are a gem!

 

STI 2365 at 1615 hrs. +4.1 pts. We are actually in +ve territory!!!!! 45mins more!!!!

 

STI 2357 as at 1610 hrs. -6 pts from yesterday. If it holds for annother 50mins, we are out of the woods!! Everybody, sit tight and keep fingers crossed!!!!!!!

 

I wish I can tell you I am laughing to my bank but it is not to be. I just cut loss on my UT and have been sidelined for stocks cos it appears to be downtrending.  Thought to let the dust settle first before I enter slowly.

I was actually looking at OCBC with the intentions to buy in.  When I next look at my screen, it's climbed so much so I missed the boat. 

A few things to check with you. Since the window dressing is done for Q3 today, won't that mean selling on Thursday?  If we buy in today, won't we be taking a big risk since tomorrow is a holiday and the bailout package did not pan out?  I'm still trying to understand the whole dynamics .... :)

Counters like STE, UIC and those that you mentioned are still above their NAV so how did you manage to move so much of your funds?  Where to? 

Thanks Elfie, you are a gem! 

 

hehe. the correct answer to that, trader88, is that i hold a shifting allocation in my portfolio. ie, a % division among short and longterm counters. as accord to my own risk profile. (cos i know i'll just die of anxiety if i do 100% rapids. ) 

this % division among short and longterm remains unchanged. because it is part of initial money management strategies. so i used what was allocated for shortterm scalps today, as well as picked up more of my longterm baby.

So money management is fully intact and according to plan.   

hope you're doing well like this fella too -->  !!

 

heya colorado, missed your reply on the thread earlier.  how're you doing?

i think i really shd get moving on a course. lol.

meanwhile, look at the old STI, folks! we're only -10!  c'mon baby, take the gap!  


 

 

elfinchilde,

You action today seems to me you are 90% a trader and 10% a long term investor.

 

i know.   i moved quite a % of my own capital today. i'm a happy bug.

methinks it may be more than just window dressing tho, for some counters. others remain weak. but whatever. i vote today the easiest tech play of the year.   

 

Fund managers are trying very hard to window-dress before market close for Q3??