Sunday, 17 January 2016

A(nother) market turmoil

Recently, another market turmoil has emerged. Major overseas market are having big drops. Well, except KLSE.

This time, apparently sparked by a plunge in crude oil price and fears about Chinese economy growth, has the overseas stock market to drop 2-3%, literally every second day. Chinese economy growth problem? Really?

Brent crude oil: Looking back only to realise that oil really start to drop since 2H 2014. And it drop really quickly. I thought it would stop at around USD 40/barrel, but the market always surprises you. I has now come down to below USD 30/barrel. The financial market is interesting: the crude oil price has rarely gained any considerable attention in the past, and it is now ubiquitous on the media.

(Print-screened from Bloomberg)

NASDAQ: I have a dream of NASDAQ to shot up to 10000 points in coming years for another round of technology bubble. But it now looks like an impossible task?


(Print-screened from Indexq.org)

DAX is literally dropping 2-3%+ every second day for the past week!


NIKKEI is literally dropping every second day too.


On the other hand, KLSE is like a heaven, completely oblivious to what is happening globally. Magic always happens in Malaysia, going along with the phrase "Malaysia Boleh".

KLSE

The last "noticeable" adjustment occurred in Aug 2015, coming with no signal (at all). In less than six months, another round is coming. Frankly, no one can stand seeing stocks dropping to such an extent every second day, let alone that the bearish market has yet to be confirmed.

I am wondering, the market hasn't even drop for 20% and the market sentiment is already so negative, what if something worse is yet to come?

I would like to see if this would turn out to be another adjustment.

Sunday, 10 January 2016

2015 Review

Generally,

1. 2015 signals the rise of put warrants in KLSE, which is something that I did not touch at all in 2015, which turned out to be a correct decision: when something seems so hot in the market and everybody is trying to make a slice from it, the wise action to do is to stay away from it.

2. 2015 also sees the birth of CHINA-A50 call and put warrants. Catching a correct trend could easily secure a profit of 20% in a week (and vice versa). I played once and that's it. China stock market is comparatively volatile and these structure warrants aren't meant to hold long.

3. 2015 is the year of export counters due to an abrupt depreciation of MYR. Glove stocks are the dominant players. Unfortunately I did not catch any of them.

About myself:

1. Dividend sums up to be RM 1338.19 -- not a big amount, really, but it is a bonus for me.

2. The number of trade I have transacted is close to the sum of 2011-2014, i.e., unbelievably high. Some are really good decisions, but followed by other bad decisions not long after. Still, I need to learn to hold cash without "feeling itchy on my hand".

3. I bought some CWs that if I continue holding I would have secure a huge profit. But there is no such thing anyway.

Using busyness as an excuse, I buy shares purely based on suggestions on the Internet. This is nothing to be proud of, but this is what I have done for the past year. Although quite a number of mistakes have been made, the overall return is satisfactory. Perhaps later this year I would have time to start making my own study on the market.

I set a high aim for 2016, hopefully to achieve it by the end of the year.




Sunday, 13 December 2015

US: The possibility of a rate hike

At this moment, the financial world couldn't have paid more attention to the next FOMC meeting on 15-16 Dec than any other thing.

Having kept the interest rate at 0.25% since Dec 2008, you always read news reporting the possibility of a rate hike in the US interest rate. This type of news is even more frequent this year, but there was no rate hike then.

In theory, a rate hike would be detrimental to the stock market. Therefore, whenever the stock market drops "considerably" in one day, the possibility of a rate hike will be the culprit. This is the case for last Friday when the US market once again bore the brunt and dropped sharply. Dow Jones and NASDAQ plunged 1.76% and 2.21% respectively while the Brent and WTI crude oil prices have slumped 4.53% and 3.10% respectively to a new low.

This causes a great pessimism in the market sentiment. People say that the market is going to crash after the rate hike. Yes, it does sound scary. But really? I mean, since when does a stock market crash become predictable? Let alone that the possibility of a rate hike has been rumouring in the market for months if not years such that the news would have been absorbed by investors and the effect would have been reflected in the current market.

Thinking from a different direction: would it be that there is no rate hike in the coming meeting, or that the rate hike is smaller than expected, such that the market is going the opposite direction as to what the public expects? Isn't this the way how the stock market works?

Tuesday, 8 December 2015

KL: The consequence of betting on quarterly report

This article was written entirely based on experience.

I like to bet on quarterly financial reports. The idea is simple. At the end of every month (esp. Feb, May, Aug and Nov) is the due date for companies to announce their quarterly reports. I like to buy in few weeks before the report was announced, such that if the report is good, the share will jump, snapping potential profit in short time.

However, this method of "playing" stocks seems to be tumbling this year. For whatever company that I bet on a good report, the opposite happened: share plunged after the reported was announced, causing losses.

PRIVA is the first example. I accumulated this counter in the beginning of May.  That is very naive of me. The result was announced on 28-5-2015 and it was a normal one, with a profit slightly less than the year-to-year quarter. On the next trading day, the share dropped 8%+. I cut loss not long after that. This has cost me 27% in less than 1 month.

The second experience is SIGN. This was mentioned before in a mistake on SIGN.  Because SIGN is an export counter, I was hoping that with the depreciation of MYR, I could profit from a good financial report.

SIGN is much more extreme. The very same thing happened twice! In Aug, the share plunged nearly 15% on the next day after the announcement. I lost the bet which cost me 25% in 2 weeks.

Not long after that, the share went up to the level before the announcement of Aug report. This gives an impression that the company is doing good in the coming quarter. However, the report which was announced at the end of Nov wasn't good as all. On the next day, SIGN plunged 15% for the second time.



SIGN drop after financial report


The third is GOB.

Prior to the announcement, the share has a big white candle, which of course I am very happy. I entranced in my own aspirations, as I always do. Then the company reported a loss. The next day GOB dropped 8.8%. This cost me to vomit out all profit.


GOB dropped after financial report


These examples may just be the tip on the iceberg. From these examples, it seemed that buying just before the quarterly report is no longer working, at least for small-cap companies. Looking at this trend, somewhere, someone seems to have the seer-like ability to predict in advanced.

Maybe there isn't any conspiracy theory, the company really wasn't performing.

Maybe there is a conspiracy theory, that the company manipulated the fiscal report such that a bad result was portrayed to wash out retail investors. If this is true, does it imply that holding a share for more than 3 months is not a good idea?

A very interesting trend is unfolding in KLSE.

Wednesday, 25 November 2015

KL: Aiming Solution Engineering

Solution Engineering (KLSE: SOLUTN) is a listed company in Bursa Malaysia. The company manufactures laboratory-scale equipment for (tertiary) education and research purposes. The product covers a wide range of research field, including heat transfer, separation processes, process control etc.

I understand that a number of universities purchase their lab-scale equipment from this company, both local and overseas university. University of Malaya is an example. When I did my bachelor and saw the company logo on the lab-scale equipment, I did a brief study on it. At that time the company was losing money continuously, so I have little interest in it. Had it not because of "Cold Eye" (an investment expert in Malaysia) who accumulated this counter, I believe it will continue to remain undiscovered. He now owns 4.92% of company share, which is just shy of the 5% where the investor is required to report to Bursa Malaysia as a substantial shareholder.

Last week, the share jumped with high volume followed by low volume adjustment. I noticed it has the typical movement that I was looking for, similar to INARI not long ago.



The steps are the same:

1. Price soared with high volume
2. Adjustment with low volume
3. Buy in

As simple as that.

During the adjustment process, the lowest traded price will usually be higher than the price before soaring (i.e., RM 0.395 in this case). However, yesterday it has gone down to RM 0.390. I would like to observe for a few more days before making a decision.

Friday, 13 November 2015

Catalyst: The myth behind cholesterol‏

Another TV show that I feel like to write something about.

Australian Broadcasting Corporation (ABC)'s Catalyst programme once broadcasted a two-episode of 1 hour documentation titled "Heart of the matter", explaining the "cholesterol drug war". It was more than 2 years ago. I wasn't aware of this until recently, when Sydney Morning Herald reported about  60,000 people quit cholesterol medicine after viewing "unbalanced" TV program. Sensational, isn't it?

ABC has now removed the video from its Catalyst website due to the pressure from related authorities. Being sceptical about the medicine industry, I went on-line to find these videos, and thankfully, it can still be viewed (at the moment of writing).

The programme explains about how the "weak hypothesis" of the link between cholesterol and heart attack can  become today's medical dogma. I do not deny that the programme is biased, but if this is the truth that has been concealed for decades, what is wrong with being biased?

WARNING: The following videos in this video may utterly change your view on cholesterol.





Sunday, 8 November 2015

KL: Buy back INARI's son

A good horse will not turn back to eat the old grass (direct translation from a Chinese proverb 好马不吃回头草). This is true for a good horse. However, I am certainly not one of the good one.

INARI, my old buddy which I have sold Oct 2014 during the big drop -- a pain when looking back. Ridiculously, I targeted RM 2.70 (before the second right issue ex) at the time of buying. I went up to as high as RM 3.30 (before ex) and I didn't sell. It wasn't until the big drop that I finally sold at a price well below my target price. This happened before, and history has repeated itself.

Anyway,INARI price soared with volume recently:

INARI

This is a very nice pattern, so I follow these steps that I used to do:

1. Price soared with high volume
2. If got adjustment, wait for it and adjustment must come with low volume
3. Buy in after a few trading days


As simple as that.

I intended to buy INARI-CW. But looking at INARI-CW, only CI and CJ have some "attractive features". However, I ended up buying INARI-WB as CI and CJ cannot play:

1.CI banker's is a scrooge, queuing only 500 lot for each price bid! **

**Conspiracy theory: I know conspiracy theory is a cliché nowadays, but could this imply that the banker has no confidence to earn money from this CW, hence the low volume queue?

2. CJ itself has "acceptable" volume for each price bid, but nobody trades it, hence no volume. CW with no volume -- cannot play.

INARI, I am back by buying your son!