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still the same advice...though market is still uncertain now, we tend to be positive-biased as of now...not for contra
| Posted: 06-Aug-2007 15:02 | |
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irrational pessimism now in the market even when Singapore economy is booming (goldern era as defined by our MM), and it is not logical...for those with strong holding power, it is time to accumulate good stocks (not all at once but bit by bit)...for those who have no money to hold but still want to trade, still the same old advice (follow the three rules) Rule 1: Be disclipline Rule 2: Be disclipline Rule 3: Go back to rule 1 Good luck |
no more chance for NDP rally? PM's msg will only be broadcast tonight, by then the market is closed... For once, the market celebrates NDP with Singapore's colour... RED? choy choy choy...
for speculative shares, my advice is to cut when market going down. They can really go down a lot. You never know where is their bottom.
Take care. Dun contra and dun use margin.
Here's a fact: The speculators and hedge fund managers who run today's stock market need market volatility in order to make money.
They can't make enough money if the market stays flat or moves only a bit, so they like extreme and unexpected price movements. They especially like sudden, surprise movements down, when they can make money off stocks they borrow and sell -- or, as they say, "sell short."
Money Lust Satisfied
That's what's been happening the past couple of weeks. But it's not interesting to say that the speculators are whipping the market around to satisfy their money lust. So the speculators themselves make up reasons for why the market is fluctuating, flog those reasons to the media, and then profit if some other speculators believe the jive reasons and jump in the way the manipulators want them to.
Supposedly, the market is "correcting" because of worries about the housing slowdown, and also because of fears that the debt markets that support mergers and acquisitions is drying up.
These are interesting theories, and people who don't know a lot about the stock market or the economy might find them beguiling. What follows are a few truths that show how shallow these "reasons" for the stock market moves are.
Housing a Theory
Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.
In any event, housing is only about 5 percent of the economy. If it falls by 15 percent, that would represent a fall-off of about .75 percent. That's not trivial, but it's also not the stuff of which recessions are made.
The fact is that there is no recession. The economy is suffering from a labor shortage, not a surplus of unemployment. The Fed is worried about excess demand, not slack demand.
Corporate profits set new records every day. Whatever's happening in residential sales and building is simply not slowing down the economy. Why should a Boeing or a Merck or a Pfizer have any reaction to housing at all? Because the speculators sell everything they can when nervousness sets in -- and for no other reason.
A Minor Major Mess
Subprime is a mess. But it's a small mess. Subprime mortgages account for roughly 20 percent of mortgages even in the most heavily exposed states. About 20 percent of them are delinquent in some way. That's 4 percent of mortgages.
Of these, maybe half, or 2 percent, will go into foreclosure. There will be roughly 50 percent recovery on sale of these. This is a loss of 1 percent in the mortgage market -- a sum the lenders have already made many times over because of the hefty fees on those deals. In the context of the size of the U.S. financial sector, it's nothing.
And why should a crisis in subprime drive down stocks in Mexico and Thailand? Again, because the speculators seek to create panic to make money by selling short, and they sell short everything.
There's simply no connection between subprime and developed or developing nations' stocks. This by itself shows the thin context of the selling wave late last month.
Money's Still Cheap
What about the supposed drying up of loans for mergers and acquisitions by private equity firms? Well, here's a good, simple test of just how valid that explanation is for stock market moves: The majority of private equity takeovers are financed with junk debt.
If there really were a major shortage of funds for these deals, the interest rate on the junk would skyrocket. Instead, while the rate has risen by about 150 basis points in the past month, the spread between junk and investment grade is now about 290 basis points, according to leading junk analyst Martin Fridson.
This is a lot lower than the year-end average of the spread from 2002 to 2006, and far below the almost 800 basis point spread during a true interest-rate crunch like the one after the tech meltdown in 2000-2002.
So that's phony, too. Interest rates have risen, but not anything like what they've done in real crises. And besides, the Dow fell by about 550 points the week before last, yet not one of the Dow stocks is involved as either acquiror or acquiree in a private equity deal.
In short, money is no longer virtually free the way it was for private equity deals in the past year. But it's not expensive by historical standards, either.
Spreading the Fear
In other words, it's all the speculators trying to panic us so their sell programs will make money. And they'll make money as long as they can spread their panic. When they can't do that any longer, they'll work the long side -- and make up reasons for that, too.
In the meantime, the economy is strong. Profits are great, and interest rates are low and will stay that way. Don't sell. With all the shrieking about the market, it only fell to what it was about five weeks ago -- and we didn't think we were poor then.
So let the speculators shout "fire." As of right now, they're not blowing anything but smoke.
Sunshine after the rain....
Now that all the news have been disgested, it's time to focus on company's earning...
storm is finally over and downgraded to heavy downpour.
it's going to be find soon.
DOW showing divergence for TA indicator.. it seems we can expect volatility in weeks ahead but should have a rebound
Looks like we also face big problems on our sub-prime stocks that has come back to very modest levels. Oculus, Jade, Armarda, Ban joo, Rowsley, Equation.... ALot of punters are burnt, including those BBs that bought placement shares at very high levels. It seems these companies benefitted from the placement but not reflected in the share price. BBs could be the worst hit followed by us. Let's hope Bear-Monkey cut rates big big today..( Just my 2 cents )
hi amateur99:
shanghai index doesn't go down because it is a closed market: ie, entirely domestically supported. foreign funds only have the right to buy their A list companies, and even then, the % is capped, and it has to go through some financial rules, not entirely sure of the process.
but basically, the entire chinese market is supported by domestic money, which is so flush with cash that it just keeps going up and up. rem that this is a young, growing country: the way ASEAN was back in the 80s, when it was double digit growth every year. which is why they can easily support PE ratios of 50x, 100x even (ie, double profits each time).
and since no foreign funds to interfere, completely no exposure to US subprime--or even if there is, whatever they pull out, even the bitty man on the street will rush to take the place (1 bil ppl, remember). so no problem at all.
yah. agree wtih lordtan. elfie bought sti put warrants as insurance alr. >~<
These few weeks, you can made some profit by buying some put warrant for STI index.
hi. can anyone please explain why the shanghai index doesn't go with the downtrend like any others? is it really THAT strong or the chinese is very protective of their economy to make sure that nothing screw up their olympic games moment? thanks.
Vert likely STI will go down further. Dow Jones Average was opened lower by 65 points just now. It is not a good sign and it will really take few months to rebound
Most players now is in fear..., not greedy anymore..maybe wary and tired, been weakening by the word fear, been stress out liao and don't know what to do next....The beginning will have end and is still earlyday yet for dust to settle......This day market is not like before. trade with care.
Stock Futures Move Lower After Productivity Data; Fed in Focus
DJ future pointing lower. Did I hear people cursing already....?
DOW +280 points...A big NO used.
Just a word of advise..cut lost is very painful, don't cut losses is even more painful...this week will be will be another force selling week with Thursday a public holiday. (National Day)
AROON indicator of all world stock indices except Shanghai are in a downtrend.
The accuracy of this indicator in predicting trends is about 80%
Could be due to thur being a public holiday for spore plus only fri is a day before weekend. Sporeans are very cautious ppl after all this bad experiences. Better days only after NDay.
Must be spooked by Hang Seng.. Nowadays want STI go up very difficult. HSI, Nikkei, Dow and practically everyone must be up before STI goes up.
DOw up 280 ...STI up 7 points...DOW down 280..STI down 127...come back in Nov-DEC better..STI gone with the wind
aiyoh... went out a while, came back, sti down again. looks like gonna close -ve.
elfie, think giantlow is good in warrants. may be good to ask him.