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!

Wednesday, 28 October 2015

Ringgit depreciation: what will I do?

A lot of people are (discussing about) converting MYR to foreign currency. You can see this from the foreign currency account offered by some banks, e.g., Maybank and Public bank. This was what I thought a few months ago. I have a second thought now: I decided to do nothing.

Firstly, the current exchange rate is about 4.2. I believe there is really not much room left for depreciation.

Secondly, it is really too little too late to convert to foreign currency now. This should have been done before it broke 3.8.

Thirdly, I speculated that the BNM will raise the overnight policy rate in September's meeting, as a move to "save" the currency. But BNM kept the interest rate unchanged. On surface, it shows that BNM does not want to intervene the movement of MYR. On a deeper level though, perhaps they see that MYR will go back to its reasonable value after those "exogenous factors" are gone?

Finally, I can profit from the KLSE to cover the currency depreciation. :D

Now that MYR seems to stabilize around this value, which is not that bad. A possible trend is to lingering around this point for sometime before changing direction. Whatever direction it goes, MYR should still be "safe" in a few years to come.

Wednesday, 21 October 2015

KL: FGV call warrants analysis

I traded FGV once -- on the first day when it was listed publicly. The IPO price was RM 4.55, but opened much higher on the first trading day. I bought @ RM 5.39 early in the morning. Seeing that the trend did not going well, I sold on the same day @ RM 5.40, incurring a small loss after brokerage fee. That was more than 3 years ago. Luckily I was determined to sell at that day, or else?

Now that FGV seems to rebound from the bottom. I am interesting to catch a rebound, thus I studied FGV call warrants.


*Credit to the Macquarie Group, an Australian based company, for having the very useful website Malaysia Warrants to enable me to summarize this in a few minutes.

Based on how I choose a call warrant, I look for CW with >180 days expiry. Thus the choice comes down to C6-C9. For low premium, FGV-C6 and C8 (newly listed) stands out. C6 has a lower premium and higher gearing but C8 has a lower conversion ratio. Although FGV-C9  has high gearing (also newly listed), the premium is way too high. Therefore, C6 and C8 will both be a good choice.

Both C8 and C9 were issued yesterday. Hence you can see the style of CW issued by different issuers. 

1. Macquarie exercise price is really high, while RHB is really nice.
2. Macquarie CWs always have relatively shorter expiry date.
3. A conversion ratio of 3.4 for a share price of RM 1.7x is too high. I am very impressed with the CW issued by RHB, for having such a low conversion ratio!

Disclaimer: at the time of posting, the author does not have any FGV nor FGV call warrants.

Saturday, 17 October 2015

Q&A

It will be very rare of me to share a TV programme, but Australian Broadcasting Corporation (ABC)'s Q&A has impressed me so intensely that I think I should write something to promote it. Q&A is broadcasted live on ABC every Monday at 9:35 p.m. AEST.

Q&A invites a panel of 5 to answer questions from the audience which is made up of the public. While you would expect most of the issues discussed are about Australia (politics), there are other general topics that are "borderless".

Despite getting funding from the government, Q&A can discuss all kinds of issues openly, including criticism to the current government. No censor. No manipulation. No brainwash.

Below are some topics that I found interesting:

The discussion about death on 18 May 2015, minute 1:14

Death, something that we perceive as being in the distance, but in fact it is always just around the corner. The panel has given some insightful opinions on this topic.



The discussion about marriage equality and religion on 8 Jun 2015, minute 11:30

Dr. Cornel West talked about "Revolutionary Christianity". His view on religion has impressed me. Religion has increasing become something that, in my opinion, is used as a tool to manipulate the public. It's sad to see that religion has been twisted in so many different ways and levels, but it's glad to see that there are people whose mind remain open and wise. His response gained an applause from the audience -- when you can gain an applause from a public audience regarding a topic like this, you know how good the answer is.



A full hour of discussion on mental health issue 5 Oct 2015

I have to confess about my admiration to one of the panel Fay Jackson, with her ill condition yet she still has the courage and bravery to turn public. Bravo!




A full programme of Q&A can be found on ABC Q&A Website.
For the latest 4 episodes of Q&A, you can view it with closed-caption on ABC iView.

I hope you will enjoy the programme as I do.

Saturday, 10 October 2015

2015 Q3 Review

KLCI has not been performing well for this quarter. It took a roller-coaster ride to drop continuously in August before it finally rebounded in September. This round of adjustment is worse than Oct and Dec 2014, probably similar to Aug 2011 in terms of magnitude and pattern.

The Oct 2014 experience which cost me to vomit out everything is still lingering. Perhaps because of this, I have learnt from the past and "escaped" relatively unscathed in this adjustment.

On the bad side, I bought back SIGN not long after selling it.

On the good side, I bought MYEG-CK @ RM 0.055 in the morning of 25 Aug -- the lowest point of adjustment when KLCI was touching 1503. It wasn't an easy decision. The famous market quote of "buying fear, selling greed" is easier said than done. Seeing KLCI dropping everyday, it is tough to do the opposite. But if you have the confidence to do the opposite, the return can be very rewarding in a very short time.

The biggest lesson to learn from this big drop is to walk off after selling. My emotion remains wavering after selling. Making decision under this condition does not do me any good. If I could just walk off for 1-2 weeks after selling, things would have been much better now.

Past experience offers a chance to improve in the future. And this is a very good experience for me but to learn to walk off next time or history is destined to repeat itself.

Monday, 28 September 2015

KL: MYEG proposed bonus issue, again?

On 18-9-2015 MYEG upped with huge volume. There was no sign at all before that, until last Friday: MYEG proposed a 1:1 bonus issue, AgainAnd the fact that the price will soar one week before the announcement clearly shows that somebody does know the news well beforehand, and individual investor like me is always the last to know.


MYEG


A 1:1 bonus issue means that if you have 1000 shares of MYEG, you will get 1000 bonus shares. In this case, MYEG currently has a total of 1.2B shares. Hence a total of bonus share of 1.2B will be issued, making the total share to be 2.4B after the change. As the net profit remains the same, the EPS will be halved, i.e., MYEG share price will be halved after adjustment.

In short, since your total share x2 and the share price x0.5, the portfolio value remains unchanged. But the term "bonus issue" conjures up the idea of free, that the company is rewarding shareholders with free shares. As a consequence, share price will usually go up after a company announcing bonus issue. Technically, it increases the liquidity of the security so that more people can buy the share. The drawback is that the shareholding will generally be more widespread and diluted.

Back in 2012 I have always been eyeing on MYEG, but I was too naive to think that the security has high PE (60), without considering it as a fast growing company. I lost chances after chances for not buying it. That is why I always seek opportunity to earn from MYEG. Has the opportunity arrived now?

Thursday, 24 September 2015

KL: A mistake on SIGN

I bought in SIGN in early July based on a friend's recommendation. During August (when KLCI was dropping everyday, literally), I did learn from the past to take profit on 7 Aug @ RM3.00 -- the second day of big drop. This is an exceptional decision -- the selling price is within 10% from the high of RM 3.27.

I was very happy at first. But then seeing the stock continue to go down, I tried to "catch low", hoping that the stock would rebound soon. This is a common error people make: catching low. Another reason is the thought of betting on the August financial report. I was thinking that by benefiting from the depreciation of MYR, export counters should be doing well.

I bought back on 12 Aug (it was just 3 trading days after I sold!), wishing to earn for a second round. Although suffering from unrealized losses straight after buying, I hold on to the optimistic side of a beautiful fiscal report -- another common error people make: take chances. The financial report was released on 27 Aug and it was bad. SIGN dropped 15% on the next trading day. Not only I "vomit out" all profit in the first round of trading, I incurred a further loss.


SIGNATURE INTERNATIONAL BHD


Buying back just after 3 days of selling is really unnecessary.  This decision has cost me an arm and a leg this time. I took one step forward (took profit), but then I took another step backward (bought back) to the origin. Perhaps  I should never look back to stock after selling.

Sunday, 13 September 2015

KL: the rise of put warrants in KLSE

Index call and put warrants (FBMKLCI-CX and FBMKLCI-HX) have been a hot topic for discussion lately. Opening the trading platform, you see that FBMKLCI-H and FBMKLCI-C warrants are trading in the top volume, literally everyday.

This is something that has never happened before in KLSE. Usually you only see penny stocks appearing in the top volume section. Now the game has clearly changed. It has already gone insane until the stage that when KLCI rises, you will even see put warrant to go up and call warrant to go down; and vice versa.

As far as I could remember, call warrants started to gain public acceptance around 2006. Back then, put warrant does not exist in KLSE. According to this website, it wasn't until 2010-2011 that the first index put warrant FBMKLCI-HA was issued (apparently by OSK?). But this put warrant was born in unlucky time of bull period and ended up worthless.

Then, FBMKLCI-HB was issued by CIMB in July 2014. It became the spotlight in KLSE during the big drop in Oct 2014. And because of that, put warrants are mushroomed by investment banks. To date, the latest put warrant is FBMKLCI-H9: more than 30 index put warrants were issued in less than 1 year. This is unprecedented and extraordinary

After all this time, I would say that the late 2014 to 2015 is where put warrants have gained the public awareness.  This is good, investors know that now they can trade the index or stocks in both ways. However, I do doubt if now is a good time to trade put warrants: everyday in the top volume has already made me lost interest, what more to say when these warrants are extremely overvalued now?

Sunday, 6 September 2015

KL: PRIVA price soared after selling

The unwillingness to sell a share is the worry that the share price will soar right after selling.

I sold the rebound-catching PRIVA on 2-9-2015, and the next day it shot up 30% with volume. This is probably the first time I have such a farcical experience: my previous target of 50% was completely forgotten at the time of selling due to fear. The rebound-catching timing is not bad, but the selling time is bad, resulting in a loss.  This is certainly not a good feeling, but blaming and regretting is futile because at the time of selling, I must have already used my discretion to come to the decision. I do not have the prescience for the movement of a stock, so even if the price soars after selling, there is really nothing I could do, let alone that the worry is purely based on a (negative) projection into the future.

Becoming conscious of the unconscious worry marks another advancement in my investment journey (on the mental level), that selling is nothing more than a transaction. Hopefully next time I have less mental obstacles when taking profit, which is crucial especially when trading call warrant.


Wednesday, 19 August 2015

KL: PRIVA rebound catching

Catching a rebound requires more than bravery. It requires the correct timing, the confidence to buy, the calmness to hold and the resolution to cut loss should the stock keep falling down.

I queued PRIVA @ 0.195 early in the morning, when the queue was 0.200 best buy and 0.205 best sell. Soon after the market opened, I saw KLCI "waterfall-ed" again and immediately wanted to cancel my order. But before I clicked on the "cancel order" button, the transaction was matched.


PRIVA rebound

Soon after that, the best sell became 0.195 in no time.

Soon after that, the last done price was 0.190.

Soon after that, the best sell become 0.190 and the best buy was 0.185.

This implies an immediately loss and is not a good feeling at all. It was tough to hold the counter in that situation, especially when KLCI has been plunging continuously. My confidence is certainly shaken right after buying. I decided to observe first and closed my trading platform. Until now, so far so good.

While PRIVA is not a 5-star stock (my basic requirement to catch a rebound), being a technology stock and a price of < 0.200 makes me irresistible. I target a return of at least 50% in short time.

Sunday, 16 August 2015

Currency talk 3.0

In Currency talk (1.0) I made a bold statement that the day of AUD:MYR = 1:3 is over, with a "however":

If you really want 1:3 back in the days of 2012, you will have to hope for a quicker depreciation of MYR than AUD. But even if that happens, how worthless is MYR at that time? And how much you could do with it?

Back then, the currency was trading at about 2.80. According to BNM rate as at 14-8-2015 17:00, AUD:MYR is buying at 3.0112. Unbelievably, something that I wrote without much contemplation has become true in less than 6 months.

And NO, this is not due to the appreciation of AUD but a quick depreciation of MYR since July.

And NO, even the ratio of 1:3 is back does not mean that the MYR you converted back has the same value. The 1:3 today is completely different from the 1:3 back in 2012.


And NO, I do not want to see this coming as this means that MYR is getting worse. It looks like there is no signal that could stop the depreciation of MYR.

Human's brain is hardwired to survive. At the critical moment, protecting own interest is always the top priority. This is really no different from politics where it is all about self interest. Therefore, believing that the government could somehow help the currency is unrealistic. Because of this, I have to be responsible to my wealth. I thought that it is now a bit late to change currency, but whatever it takes, I have to come up with a Plan B.


Sunday, 9 August 2015

Currency talk 2.0

In currency talk, I mentioned that MYR has no cure but insidious depreciation. Unfortunately, the prophecy has become a reality. The chart below shows the trend of USD:MYR in the last 2 months:

USD:MYR
(Figure obtained from Yahoo finance)

Point A:  30th - 1st July. The credit rating of Malaysia remains unchanged and the outlook was upgraded to become stable. MYR has rebounded strongly in the following day. Shockingly, this rebound only last for 1 day! And because of this conspiracy theory arises...

Point B: 7th July. USD:MYR broke 3.80 for the first time since 1998. I thought that 3.80 will be a strong psychological support since it was the rate pegged 17 years ago. But it did not look as "strong" as it should be. The slope of that day is relatively steep, showing that it breaks the support "just like that":



Point C: 22nd July. After breaking 3.80, I was looking for a rebound -- to at least 3.70. The rebound did happen, but to a much lesser extent and a much shorter period than I expected. This scares me a lot.

Point D: 7th Aug. USD:MYR was trading at 3.92. Why does it depreciate so fast? Perhaps political issues has lower the confidence of foreign investors?

Seeing the rate of MYR depreciation, Many Malaysians stocking up on Singapore dollars, US dollars as ringgit weakens. This basically tells me that now is not a good time to change money.

In 1997, the damage on Malaysia was relatively "mild" as compared to its neighbouring countries (except Singapore). Looking back, it was definitely a right decision to peg USD. But the current situation in Malaysia seems to be developing another financial crisis. Keeping in mind that US has still yet to increase the interest rate and MYR already like that scares me a lot. What if US really increases the interest rate this September? It is also possible that BNM may raise the interest rate in September meeting in trying to stabilize MYR. Interesting things might happen in a few months time.

Sunday, 2 August 2015

KL: KLCI technical analysis

KLCI is really weak recently. Trying to earn money from KLCI lately has been challenging. Regardless of what shares you are trading, the index is still the most important benchmark in KLSE as it determines the general trend of the market. How is it doing? Let's examine this from the monthly, weekly and daily charts.

1. Monthly chart:

KLCI monthly chart

Monthly chart does not look good. MACD and stochastic are heading negative. The last candle, July 2015, was primarily due to the last trading day where KLCI was pulled up by 23 points. Was this a sign just to draw a "nice" chart or is it that KLCI is ready to go? It has 3 black candles followed by one white candle where similar trends have been observed in 2008 and 2011. While 2008 was a real bear, 2011 was an adjustment. Which way will it go this time?  Only time can tell. 

2. Weekly chart:

KLCI weekly chart

Weekly chart looks a bit nicer. The chart looks like forming a double bottom. All MACD, RSI and stochastic seems to recover from the bottom. However, no sign of strength was observed.

3. Daily chart:


Daily chart cannot tell much. Chart shows KLCI seems to have "triple bottom" recently. MACD, RSI and stochastic are heading positive, but the trend in daily chart can change very abruptly.

A lot of rumours say that if the PM were to step down, it will lead to political instability and chaos (as in the stock market) would ensue. I couldn't be bother about this factor. Partly because I don't think he will step down; and partly also because who knows which way will the stock market go if he really steps down?

While a number of investors do not look good on the current market, I still yet to spot a "madness" in the stock market. After all, standing at 1723 is less than a 10% drop from the peak of 1890+. Is that really bad? But perhaps the drop occurs successively due to the involatility of the KLCI, it felt as if the drop has been long and significant. My view is that while bear has not yet formed, the chance of "final bull" remains unclear. The way to deal with this is as always: prudent investment involving good fundamental stock.

Tuesday, 21 July 2015

KL: Call warrant analysis

Recently, MYEG touched a low of RM 2.40 on 16-6-2015 and a high of RM 3.03 on 2-7-2015 in 2 weeks time, equivalent to a ~26% return. If you leverage your capital by trading call warrants instead of the mother share, what would be your return then?

MYEG trend


Call warrant^ Low High Return
MYEG-CD* 0.340 0.480 41.2%
MYEG-CG* 0.190 0.325 71.1%
MYEG-CH 0.185 0.320 73.0%
MYEG-CI* 0.030 0.105 250%
MYEG-CJ 0.080 0.200 150%
MYEG-CK 0.060 0.145 142%
MYEG-CL 0.075 0.160 113%

* MYEG-CD,CG and CI expire on July, September and August 2015 respectively.
^ MYEG-CM was issued after 16-6-2015 and hence it was not included here.

The above table summarizes the return for MYEG call warrants. Based on How to choose a call warrant, the first priority is that the mother share must possess strong fundamental. For this criterion, MYEG is a no-brainer.

Next, look for the maturity date. This means that CD, CG and CI will be out of my sight. While CI secured the highest return in 2 weeks time, this is not a risk that I would take.

Then, look for the premium, gearing and volume. CH was good back then, but its gearing is comparatively low now, meaning a lower risk and lower return/loss. For a higher gearing, both CJ and CK are satisfying all criteria. As CJ has a lower exercise price and a lower conversion ratio, if I were to trade, CJ will be my pick. It turned out that CJ is indeed the best choice. It wouldn't be too hard to choose a call warrant in this way.

Another handy information is that we can actually know how much these call warrants were held by the issuer at the end of each month. If you go to Bursa Malaysia website > Listed companies > structured warrants. In the announcement category choose "Issuers' announcement", you will see this type of announcement:

ANNOUNCEMENT PURSUANT TO PARAGRAPH 5.35(4) AND 5.35(5) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD

RHB

You will see that for MYEG-CJ, 64.68% of warrants are not held by the bank, i.e., a huge portion of warrants are held by other people. It may be big fish or retail investors. Either way, when the bank is no longer the market maker, the buy/sell queue volume will be low (e.g., from 5000 lots per bid to 1000 per bid) and this provides another criteria to choosing a call warrant.

While call warrant could bring you high returns in short time, it is a double-edged sword product. It can accelerate your capital growth or completely ruin your financial dream. My principle is to only trade call warrants with strong fundamentals mother share. INARI is an example, MYEG is another. Call warrant for shares like KNM, no matter how attractive they are, will be completely blind to me.

Saturday, 11 July 2015

2015 Q2 Review

The total transaction in this quarter was very high, probably the highest in my history.

My portfolio reached a pinnacle on 23rd Apr, which have declined since then as KLCI has been dropping continuously. Indulging myself in insatiable greed, I saw many counters that I hold turned from green to red, from earning to losing. AWC and PRIVA are only a fraction of examples. I experience the highs and lows of the rise and fall in my portfolio, feeling completely numb about the change in numbers.

The transaction involving call warrant in this quarter has far exceeded the total call warrant transaction for the past 4.5 years. After all these years, I have finally felt comfortable to trade call warrant. The experience is: taking profit on call warrant is way too important. You can't hang on to call warrant like the way I used to do with a mother share. When you see a reverse trend, it is time to sell regardless of the return.

Going to the end of June, the Greece drama and the possibility of a downgrade in Malaysia credit rating have proven that my own insight into the market was right. This marks a great advance in my investment life: to be able to insist on my own view and not being swayed by the others. Yet I know that I still have a long way to go, for having zero experience in a real bearish market.

The investment return will remain undisclosed since now.

Thursday, 9 July 2015

News by media, view by myself (end)

Writing this, I couldn't help but to recall about past experience of "big drop", i.e. Oct 2014. Last October, there was no sign prior to dropping, and the US stock market touched a bottom on 15-16 Oct 2014.

DJI Oct 2014


Then, in the mid of dropping, came the news:

16 Oct 2014:
Dow suffers largest mid-day drop in THREE YEARS as Ebola fears

16 Oct 2014:
Anxiety about Ebola

When the stock market started to plummet, there was no sign and no news. Then, the news came out. The "timing" of the news couldn't have been more "accurate". I still remember vividly how every media was reporting the fear of widespread of Ebola, including a future projection of Ebola cases of how it will become an epidemic. Interestingly, do you still see coverage of Ebola now? It is miraculously disappear from the media. I was scared at that time and learnt a big lesson, I am not buying any story since then.

The current Greece drama is amusing. In my own view, there will be no "Grexit" (how interesting can English evolve!), not now. Time will unfold this soon.

The crux of this series of blog is no more than this: the media has been highly manipulated, and trading by news will bring you nowhere but losses (Holland). While it is not easy to do the opposite when everybody is selling fearfully, it certainly pays off, sooner or later, if you can think and act independently at those critical moments.

PS: A question to ponder -- now almost everyone is talking about the potential of US to raise the interest rate. While raising interest rate will be detrimental to the stock market, will this happen when everyone is expecting the same?

Saturday, 4 July 2015

News by media, view by myself (part 3)

Example 3: Index -- KLCI

This example is interesting.

Prior to 30th Jun 2015, there were rumours about a possibility of downgrade in Malaysia credit rating by Fitch. First the earliest rumour was during March published in Bloomborg: Fitch Sees More Than 50% Odds of Malaysia Downgrade on 1MDB. Since then, KLCI has been declining continuously.

Next, the "drama" has come to the point where a review will be completed by the end of June. When the due date is approaching, more negatives news about a possible downgrade since 1998 were released, causing fears in the market sentiment.

Now the review outcome was announced. As reported in The Edge, Fitch has maintained Malaysia rating at A- and upgraded the outlook from "negative" to "stable". This is in sharp contrast to the market's expectation.

What now? What did the news tell you prior to the outcome? The coverage was all about a high possibility of downgrade. What will you do if you trust the media? Knowing that the stock market would plummet, you would sell all, hold cash or buy put warrant. However what actually happened was on 1st July 2015, KLCI gained more than 20 points, something that you don't see for at least 6 months. 

What about myself? I don't buy any of this news. Think about this:

1. If they really want to downgrade, will they let you know in advance so that you have time to sell? Frankly, although Malaysia is a "commonwealth" country, but "wealth" is not meant to be "common" in reality.

2. Even if there will be a downgrade, provided that the media were covering this, the effect would have been "adsorbed" by the market since then, and the opposite trend may happen just like the case of AUD:USD.

3. Seriously, who cares about Malaysia rating? Perhaps they couldn't care less about this.

This comes from experience though. After reading all rumours, I recalled what happened in August 2011 where US was downgraded without any preceding news. That did cause a small bear in the global market. You will have no time to sell should there be a “real downgrade". This is why I know there would be no downgrade. However I did not dare to all in when the market dropped, but this is still better than previously where I just followed other people to panic sell.

[to be continued]

Sunday, 28 June 2015

News by media, view by myself (part 2)

Example 2: Foreign Exchange

If you keep an eye on the global financial market, you will observe that 20 countries have eased their economy policies by cutting interest rates in the first 2 months of 2015. This does not include Australia which cut its interest rate twice (Feb 2015 and May 2015) and New Zealand which cut its interest rate this month.

A currency should fall when a rate cut devalues it, as the rate cut makes it cheaper for banks to lend, and for borrowers to borrow. The following shows the movement of NZD:USD right after the rate cut was announced:

NZD:USD after surprise rate cut

In this case, nobody knows that the rate cut was coming. Because it came as a surprise, the currency movement fell sharply, as it should. You will have no time to sell if you were longing NZD:USD.

Now, for the case of AUD when the second rate cut came in May 2015. Research analysts have forecast a rate cut on May 2015. It was almost a certainty that a rate cut would be announced after the board meeting. The movement of AUD:USD right after the announcement went like this:


AUD:USD after rate cut

This rate cut has not come as a surprise. Everybody knows it. Because of this AUD rises despite of RBA's rate cut. The reason was that the effects have already been "adsorbed" and "digested" by the market sentiment. If you read the news before the rate cut announcement and went to short AUD:USD, then you will become "water fish". When it is something that everybody knows, it just wouldn't go the way it was expected to be going.

Both cases have the same rate cut decisions, yet completely different reactions. Why? The difference lies in whether the news has been made known to the public in advanced. In NZ, it came as a surprise. In AU, it was expected. If you tried to make money based on news that everybody knows, you aren't going to get it.

[to be continued]

Friday, 19 June 2015

News by media, view by myself (part 1)

It is interesting to see how media influences the market sentiment, by "releasing" a particular news "just at the right time". The original purpose of media is to disseminate news to the public. While this may still be true at some time, financial news are highly manipulated. Here are some examples:

Example 1: Stock -- IFCAMSC
(this stock is too hot to ignore, and yea... everything written here and now is in hindsight..again)

This stock was crowned "The world's top software stock"(Bloomberg!) by having a 1321% return in just 12 months. The date of the news was 13 April 2015, trading at RM 1.35. The stock topped at RM 1.87 on 21 May 2015, just over 1 month after the news was released. Now it was trading at RM 1.13.



Something worth noting is that 21 May 2015 is the day just after the release of quarterly report, that the profit jumped 22x YoY. Because of the implementation of GST in April 2015, everybody knows that it is going to be a promising quarter. Yes, it is. And everybody just hoping that it will either gap up, or at least increase a lot after the quarter report. The opposite has happened. In the stock market, things just wouldn't go the way you think it would when everybody else thinks the same. 

Retrospectively, the message given by the media is obvious: the world best performing stock, luring investors to buy the stock. "They" want you to buy the stock, as if there is still a huge return waiting ahead.

My own view: sell on news. Think about this: can the "best performing tech stock" not listed in NASDAQ, London, Hong Kong or Tokyo but listed in KLSE? Why did the news released in April, not any other time? The stock has been climbing for sometime since last year, this is not a coincidence.

[to be continued]

Saturday, 23 May 2015

KLSE: VSOLAR-WA with a negative premium that is too good to be true

Is a warrant trading at a premium of -25% sounds too good to be true? It probably is.

VSOLAR-WA was trading at a premium of -25%. This implies that one could earn 25% by simply buying the warrant and converting it to the mother share, with the condition that the mother share price remains unchanged. A few years in KLSE, I can still see new things by now, how exciting is the stock market?

How can I come to know this stock? Well it occupied a conspicuous spot in the trading platform -- most actively traded counter. While a negative premium is certainly "attractive", let's have a glance at its financial summary first:

VSOLAR financial summary
Financial summary for VSOLAR (Source: Malaysiastock.biz)

As you can see, this company has no fundamental and it is not making any profit. The table below details the price of both VSOLAR and VSOLAR-WA with its premium, and how the negative premium "quickly vanished", turning into positive premium. (Historical price obtained from KLSE.my)

Date VSOLAR VSOLAR-WA Premium
22-4-2015 0.380 0.165 -25.0%
23-4-2015 0.340 0.150 -20.6%
24-4-2015 0.360 0.145 -26.3%
27-4-2015 0.305 0.140 -13.1%
28-4-2015 0.250 0.110 -8.0%
29-4-2015 0.255 0.115 -7.8%
30-4-2015 0.255 0.110 -9.8%
5-5-2015 0.260 0.110 -11.5%
6-5-2015 0.210 0.090 0%
7-5-2015 0.205 0.085 0%
8-5-2015 0.210 0.080 -4.8%
11-5-2015 0.170 0.070 11.8%
12-5-2015 0.155 0.065 19.4%
13-5-2015 0.155 0.075 25.8%
14-5-2015 0.155 0.070 22.6%
15-5-2015 0.145 0.070 31.0%

What is left now? Nothing. If there is no improvement in the fundamental of this company, I do not think the price will go up in the "foreseeable future".

You may want to ask: why does this happen? The big fish wanted to sell the shares. Making the warrant to have a negative premium is very easy to attract people to buy, because everyone is hoping that the warrant will "catch up" with the mother share to its reasonable price. Obviously the opposite happened in this case.

While everything written here is in hindsight, I did not touch this stock though. The purpose of writing this is to alert fellow investors and not to fall into this trap in the future.

Saturday, 16 May 2015

NYSE & NASDAQ: what are GAAP and non-GAAP profits?

As a newbie in the US stock market, a first sight at a financial report will often baffle at "GAAP profit" and "non-GAAP profit". What are they?

To start with, Yahoo finance offers a very convenient avenue of looking at the earning release of listed companies in the US. The date and time of the release of the fiscal report are clearly stated (as opposed to KLSE in which you really don't know when will it be released but within 2 months from the quarter end).

For example, this is the Q1 earning of TESLA (NASDAQ: TSLA). 8-K form is the name of form that contains financial results.

TESLA 2015 Q1 Earnings

GAAP stands for Generally Accepted Accounting Principles. It is the standard norms of how companies should present their earnings in NYSE and NASDAQ. In a simple way, what we see on the balance sheet is based on the GAAP profit, i.e. the common way of reporting profit.

However, a company may write-down an asset or restructure its organisation. These actions usually come with large one-time cost that may not be truly reflected in the GAAP profit. As such, a company will also provide “adjusted” earning figures that excludes these nonrecurring items. These effect, usually is one-off, will be regarded in the non-GAAP profit. And because of this, I personally think that it will more accurately reflects the company's performance.

The balance sheet of TESLA:



We see that a GAAP net loss -$ 154 M or $-1.22/share was incurred according to the conventional way of account reporting. After considering compensation expense, non-cash interest expense and deferred profit, its actual net loss is only -$ 45 M or $ 0.36/share, which is significantly less than the GAAP standard way of reporting.

The above exemplifies the use of non-GAAP reporting to account for a more accurate earning which truly reflects the company's performance. There are good and bad with both measures of reporting in the sense that the report could be manipulated to favour the desired outcome. Which one to look at is then completely up to your discretion.

Friday, 8 May 2015

KLSE: INARI-CA, a "successful" trade

Following the recent failed short term trade, maybe I should also write some "successful" transactions.

If AWC made myself stumbling, then INARI-CA could at least offer me some condolences. It was the "secret weapon" that I bet on for the recovery of my capital since Oct 2014. Never happen before that I will buy call warrant "in quantity", after realizing how much opportunity I have lost since then.

At first I was really reluctant to sell -- want to earn more. But the imminent expiry date (the last trading day was 30 Apr 2015) makes me worried and decided to sell a few weeks before expiry. In the end INARI-CA expired at RM 0.090. I cannot imagine the "what if"? Glad that I have overcome my own "mental blockage" to sell a share.

Perhaps SHH can give me another comfort, that I am actually learning to sell a share at good timing. It is trading at about RM 1.20 at the moment. Again, what if?

What if it soars after selling? Let it be. Maybe I buy another share that has better return?
What if it drops after selling? Then no worries.

Monday, 4 May 2015

KLSE: A failed short term trade in AWC

AWC is definitely a failed short term trade. I could have earned a profit of 10% in 2 days, but at the end of the day I ended up losing 10%.

This time, not only my entry price is beautiful, my timing is perfect too.

AWC


I did set a target at the time of buying, i.e. 10% short term trading. This implies a target price of RM 0.490-0.495. The target price is achieved after 2 trading days, I did not sell. A target without strict execution is useless.

Greed has crept in my mind and I "suddenly" decided to increase my target price. While I keep on reminding myself to not make the same mistake, greed has also buried my previous experience.


I do not know what to say, but hoping that I could at least take this lesson seriously.

Tuesday, 28 April 2015

NASDAQ: Amazon soars after earning release

I fail to fathom the US stock market. Amazon (NASDAQ: AMZN) was trading at USD 445 (24-4-2015), jumped from USD 390 on the day preceding the earning release. The "dumbfounding" thing is, the net profit of the latest fiscal report is a net loss of USD 57M / EPS of USD -0.12 (compared with a net gain of USD 108M / EPS of USD 0.23).

Yes, of course you cannot look at net profit alone in isolation from other figures. The revenue jumped 49% to USD 1.6B. The operating cash flow also increased significantly. The main reason for this is reported to be due to the outperforming cloud services and strong retail sales.

Having bought something from them once, I am very impressed by Amazon. The item is of great value, even after including the "international shipping" (which is really not much) and the weakening Australian Dollar. 50% discount is very common. For example, PNY Turbo 128GB USB 3.0 Flash Drive is now selling at USD 40 shipped to Australia. This is equivalent to  AUD 51.2 (based on the current rate of 1 USD: 1.28 AUD). The cheapest you could find on Ebay is AUD 68. The example goes on and on, and applies for all sorts of items.

Amazon has invested a lot to provide all kinds of new services, with a hope that in years to come, they will gain the "market share" and what they have invested in will pay back in avalanche.

According to the earning forecast, even in year 2018 the EPS would only be USD 8.29, i.e. the PE is still sky high. Perhaps this is something you can only find in a "matured" market, that considering really long term growth of a company, Amazon worths to trade at this price. This is something you cannot find in KLSE, and this excites me to involve in NYSE and NASDAQ, a market that really requires a sharp investing insight.

Monday, 20 April 2015

Tasmania, my second destination in Australia

Tasmania is a heart-shaped island located in the south-east of Australia. Locals here like to use short form for common name, e.g. Aussie for Australia; Brissie for Brisbane and Tassie is the name they give to Tasmania.

I always tell myself that I have 3 destinations to go while I am still here: Cairns, Tasmania and Uluru. Cairns trip was "accomplished" at the end of 2013. Last year I went to Tassie. I have little interest in Melbourne or Gold Coast. These places are so common that I will have heaps of chances to visit even after I leave here. But for these 3 places, although not considered as "popular destinations" when you fly from overseas, I am certain that they do not pall in comparison with those "popular destinations".

It was a very enjoyable and memorable self-drive trip of 6 days. Words fail to describe the beauty of Tassie. It is a very well-preserved place. All nature wildlife and forests are very well protected. The clear blue sky and the white clouds of Tassie seem so low and so close to you. The scenery is absolutely impressive.

The two largest cities in Tassie are Hobart and Launceston, with other small towns located all around the island. People here is very nice and have a very laid-back lifestyle which I adore deeply. Big supermarkets here (Coles and Woolies) don't provide plastic bags as in other states to reduce the use of plastic bags. This makes me feel like I am in my beloved hometown Penang.

Seafood is famous here, with oyster tops the list. Mussels, scallops, prawns and fishes, all you can eat here. They are really nice and fresh with Tasmanian salmon to be my top favourite. I have bought some cherry. I guess they are the top quality cherry in the world.

Driving from place to place in Tassie, you couldn't see tall buildings and apartments. It doesn't give you a feeling of a developed place, but it is indeed developed -- the mindset of the people here are developed that they know to protect the mother nature is a priority. All you can see are trees and grasses on both sides of the road, with cows and goats eating grasses. A house is built in a large area of green field, completely isolated from the outer world. Can you imagine how good is the air quality here, and how healthy (good) / boring (bad) is the life here?

Because it is during summer and Tassie is really close to the Antartica, the sky will only turn dark as late as 10:00 p.m.. This is the first time I experience this, as if the dark never fell.

Owing to its geographical location, it can get to 9oC even in the summer. This gives me extra appreciation to the weather in Sydney, although disgusting at times, but is still quite "mild" as compared to other places in Australia.

Some photos.

Stanley is a small town located at the north-west tip of Tassie.


(天苍苍,野茫茫,风吹草低见牛羊)


Bristowe Lavender farm is just amazing. The time we went there is just the season to flower. What a good time to visit Tassie.


There is a wild kangaroo looking for food in wineglass bay.


On the way to Hobart:



Mount wellington is a place where clouds are literally within your touch and you can look out the Hobart city.


Tasman bridge in Hobart city.


Brunny Island is the nearest place to the south pole of our beloved Earth, the crew member said that this "gigantic" seal came from the Antartica. And it is only there for a few months, so we are lucky to see this type of seal.



Last but not least, a shop known as Foxhole Medals has the front mirror stuck with this quote:

"Live your life. Take chances. Be crazy. Because right Now is the oldest you have ever been and the youngest you will ever be."

The quote says it all. Enjoy life.



Saturday, 11 April 2015

About long term investment

This is my 5th year of involvement in KLSE. While surviving KLSE in this period is nothing more than ordinary, I am still glad that I have made it, with a capital growing at a satisfactory rate.

In retrospect, the way I "handle" KLSE is by intraday, short term (<6 months) and medium term (<3 years) tradings.

Intraday tradings were extremely rare, simply because the energy and time spent is too much to bear. Some examples, MAS and CYBERT(don't learn this). All have gone to holland by now.

Short term (<6 months) trading is something that I prefer more. INGRESS, SBCCORP and PRLEXUS are typical examples. Mostly use chart to look for entry price, seeking a return of 10-30% in less than 3 months. Sporadically, there will be chances to earn "fast money" in a few days, i.e. playing rebound, e.g.  PHARMA and TAKAFUL. When this occurs, if you are bold enough, ALL IN.

Medium term (>6 months <3 years) can be torturous at times. But good things come to those who wait. INARI, PNEPCB and SHH are my old buddy now. Return has been very satisfactory. 6 months - 2 years is a period that I am more comfortably to hold a share, because they always end up good return.

Where is my long term investment?

I understand that my current investment style will not last long. When the capital becomes large, so does the stake. At some point, I will like to invest long term -- in the sense to hold a share for at least 3 years.  This is where your "skill" is tested, to see how well you can spot a good counter, as if PBBANK and GENTING in the 1980s, DIGI in the 2000s and DLADY in the 2010s. What type of companies should I look for long term investment?

Are they companies that I really like? For this, I look no further from AirAsia and AAX. It is the airline that enables me to fly between PEN-KUL and KUL-SYD. But sentiment cannot help making decision in the stock market. AirAsia has been dropping for a while, since it hit a top of RM 4.00 in 2012. If you buy AAX since IPO and hold until now then you would have lost a lot. Perhaps there are just too many uncertainties in the airline industry.

Are they companies that I don't like to involve as an individual? This means health care and pharmaceutical industry. Nobody likes to go to hospital, yet everybody needs to go there at some point. Examples include KPJ, PHARMA and IHH.

How about companies that are needed in daily lives? Consumer products. NESTLE, DLADY and others.

At this stage I wouldn't buy any of these securities. I don't look for long term investment now. Long term investment does not make sense to me if the capital is not big enough, e.g. RM 500k. Until then, I can use a portion of this capital to invest "long-term". For now, the first task is still to grow my capital, which is what I have been doing for 5 years.

Friday, 3 April 2015

2015 Q1 Review

The total transaction for this quarter is very low, which is a good thing. I just hold on to whatever in my portfolio. My capital has started to "recover" to the level of Oct 2014, which I couldn't be more grateful for.

Sometimes I would think that if I hold on to my FBMKLCI-HB that I bought in Oct 2014 until Dec 2014, I would have earned a lot. I sold at a loss after 1 week. Inexplicably, in that period of time, even one day seems to be forever, for which I long for my return to "come back" instantly.

Anyway, I thought that SHH may have second round, but then I read a news about HEVEA eyeing SHH resources published on 30 Mar 2015 in the morning. "Coincidently", this is the day where SHH gap up to open high at RM 1.56. Even more "coincident" is that the share started to move one week prior to the news. The old market adage has it that "Buy on rumours Sell on news". While I certainly don't have any rumours beforehand, it now seems that my selling time is just right for "sell on news". And because this round of shoot up is "obviously" due to the news, I wouldn't hope for a second wave. So no more SHH for me. What a pity, I still plan to earn for one more round.

The investment return will remain undisclosed.

Monday, 30 March 2015

KLSE: Sell SHH

I started collecting SHH since May 2014. This process went on until September. I once said that SHH is another INGRESS. This is why I can hold it "tightly" even during the "adjustment" (some people called it small bear) in Oct and Dec 2014, because I have confidence in SHH.

The waiting has paid off. All returns comes in 2 weeks time. But the money has stuck there for 10 months. Maybe I shouldn't ask for more. Considering the whole period, the return is still stellar.

I actually wanted to wait for "open flip" (i.e. 100% return). But the price shot up too abruptly, causing the candle to be out of the upper BB band. This always followed by a pull back, with no exception to any stock.

SHH


Today SHH opened high at 1.56, reached a high of 1.58 and closed at 1.44. A clear adjustment sign is coming. I didn't watch the market at the opening, but soon after the market opened I realized that maybe I should have a look at SHH. It opened high, and I know that I should sell it no matter how. I sold all my shares between 1.50-1.53 in the morning, a decision that looks to be correct at least from now.

This does not mean that SHH will stop like that. A typical trend would be adjusting for a few days (which nobody knows), and then continue its uptrend. Depending on the situation, perhaps I will buy back at a lower price.

I am delighted to have made the right decision. The main reason is, of course, a pull back is inevitable and imminent. The second reason is, I've found another share to buy.

Saturday, 21 March 2015

KLSE: INARI-WB, a surprise match

The experience in the past few months has let me learnt to only look at the market after it is closed. It has become my habit now.

As I opened my portfolio few days ago, I was surprised to see an additional stock in my portfolio. I was shocked at first, because I didn't make any queue at all on that day. Soon after that I realized that my queue using “Good-till" function has matched at my entry price.

INARI-WB, 1.40. I queued this price last week, didn't think that it would really match. I like this kind of surprise, a transaction which is matched without any expectation and even without my prior notice.

Note: Good-till function, is a function that allows you to queue for a counter for up to a month without entering the queue manually everyday. HLeBroking actually possesses this function. I emailed HLIB sometime ago to enquire for this function. The efficiency of HLIB is absolutely impressive. Soon after that the representative called me and mentioned the risk of using the function "Good till". I said that I understand that and the representative will activate this function for my account. It was available to use in my account since then. When I have free cash, I can queue for a stock at a low price just for fun. Sometimes it really matches, you never know.





Sunday, 15 March 2015

KLSE: SKPETRO, another downtrend

Crude oil price has been plummeting in the past few months. It has made wide coverage in all kinds of media.  The reason?  All others reasons reported on the media, e.g. over supply, decrease in demand are excuses. Except manipulation, give me a reason how a commodity price can drop 50% in 3 months. The motive? Ask Wall Street.

I couldn't care less about crude oil prices, it has nothing to do with me at the moment. Anyway, I was planning to buy SKPETRO (a component stock in KLCI) in Jan. Back then, the crude oil price was trading at about USD 50/ barrel (I used Brent Crude Oil as reference). Looking back in Dec 2014, that was the most "scary" sentiment you could find in market at that time. Everybody was talking about oil price could go even lower, that the market will crash etc.

The most funny view regaring this that I have ever heard of, is a so-called "financial analyst" who was "sharing his opinion" on the TV during the business section of a news programme. He said that in 2008, there was a subprime mortgage crisis, maybe in 2015 we will have the "subprime crude oil crisis". I really LOL when I heard this, simply because of the fact that if a crash is really coming, would the media let you know earlier?

I do not buy any of these comments. So, I was queuing for SKPETRO, hoping for a rebound. My rationale is simple, I don't believe it can go further down to USD 45/ barrel; but if the oil price rebounds, SKPETRO will follow.

BrentCruideOil Price
(Picture print-screened from Nasdaq.com)

But my queue didn't match at that time. Soon after that, oil price has rebounded  (recover?)  to over USD 60 . And SKPETRO follows the trend, climbing nearly 50% in 2 months.

SKPETRO rebound


I don't like to chase high. So I thought OK, it is what it is, seeking for another opportunity. But then, on 4th Mar, an announcement was released, regarding the designation of a vice chairman. Had he been any other person, the impact would be minimal. But the person of interest in this case has a last name of Mahathir, so you know his influence. The next trading day, SKPETRO dropped 7.2% with volume. Last Friday, crude oil price plunged 4%. Does this imply another wave of oil drop is coming?

This may be a second chance for me to enter. My patience has really paid-off. This time my appetite has gone bigger. I am aiming at C12 (SKPETRO has good fundamental), a new call warrant by CIMB, with the nicest exercise price, lowest premium and 1 year maturity date. But the trend of SKPETRO is not looking good. So I am just looking at a short term rebound trade. If SKPETRO breaks RM 2.00 and going further down, what I will be aiming is a big drop with volume, and that may be a chance to catch for a rebound.

Sunday, 22 February 2015

Currency talk

USD:
"A while" ago I was so innocent and thought that the Kingdom of USD as the international currency will "terminate": to be replaced by CNY, thinking of how fast CN grows. I was wrong. This will not happen, at least for years to come.

In 2008 when US was trapped in the subprime crisis, they "invented" a bond buying plans, or the so-called "Quantitative Easing" -- as the euphemism goes, to stimulate the economy. Six years after the US stimulating programme, I do not see a single sign of weakness in USD. In fact, it becomes even stronger.

AUD:
The experience of living in AU will let you aware that AUD is not a strong currency. Recently, Reserve Bank of Australia (RBA) cut interest rates to a record low of 2.25%. AUD has been depreciating against USD for some time since 2013, because the head of RBA  wants to see AUD to trade at 75 US cents, which I see as a really wise move, because AUD has no "qualification" to trade high (i.e. 1:1 ratio) against USD.

Strangely, many Malaysians mindset still fixed at the era of AUD 1: MYR 3.00+, or hoping that it will soon go back to 1:3+. I am sorry but this is not going to happen. Many people (Malaysians residing in Australia) do not like to hear this, I do not like to hear this as well, but it is a fact. The day of AUD 1: MYR 3.00+ is over. Now it is only AUD 1: MYR 2.80. And this is still with a recent rapid depreciation of MYR. If you really want 1:3 back in the days of 2012, you will have to hope for a quicker depreciation of MYR than AUD. But even if that happens, how worthless is MYR at that time? And how much you could do with it?

A friend of mine said he wanted to put AUD in bank to wait for it to go up. Frankly, how stupid can this thought be? Going back up? No way.

SGD:
Whenever you see newspaper headlines of "MYR hits lowest in XX months/year against SGD" etc, you will see people saying the day of SGD 1: MYR 3.00 is coming next month/year. Please, even with the most basic knowledge of forex, one will know that 1:3 is not happening in at least years. Having said that, SGD is a rather strong currency in my opinion.

EUR:
The European Central Bank has announced a stimulating programme last month. Well, when an idea/method is implemented for the first time, the effect is always good. But will the same trick work again for EUR (or JPY)? And how long can Greece stand before something happen? People have been speculating a collapse in EUR too. I bet this is something EUR's "rival" wants to see.  Will it happen? Only time will tell. But I do not look good on EUR.

MYR:
No cure but only pernicious depreciation. The self-interest gained by you-know-who politically will cause the country to pay the price economically. Maybe 5 more years to sustain?  In these few months MYR has depreciated "considerably" against USD, and is now trading at USD 1: MYR 3.60+.

I am sorry but I do not look good at this currency. If I were to choose a currency to keep, my first choice would be USD, followed by SGD.

Conclusion:
I am not a forex expert neither I know much about it. I just blow some water here. Don't hit me if you want AUD to go high.