Monday, December 28, 2009

General Economy Stuff in my Head

It's been a while since I did a hardcore financial/economic blog post. So I will just pen down some stuffs that I have in my head.

1. The Chinese Yuan
  • China is determined not to let the Yuan rise as this will make their exports expensive to other countries, thus reducing their competitiveness. This will be disadvantages for many manufacturing countries. Reiterating that eventually China will not lose its grip as the 'factory of the whole' in the years to come.
  • In addition, it also means that large scare manufacturing company will eventually have to move over to China.
  • They can afford to suppress the valuation of the Yuan because of the large amount of foreign reserve which they have, which actually comes from the large sales of their goods to other countries, which in turn increases their foreign reserves. So as you can see, it is a vicious cycle, and China will have the upper hand
  • On a side note,t I noticed while watching the movie 2012, it tells about how the currency to buy a place on the 'Ark' is in Euros and not in USD, and the building of the Arks were also done in China. Interesting...
2. STI

The STI has been inching up,slowly but steadily. However it appears to me that it will be reaching a 'stationay point' (like in math) soon. I.e. the curve is smoothing off to a peak that looks like it's going to be the fibonnaci line of 61.8% at index value around 2949.(Seen from the graph below)

Also, small caps are running like crazy, and IPOs are having big one day jumps in prices. The last time that we saw this occurrence was just before the financial crisis in Oct 2007. This is making we worry. I am currently quite heavily invested in stocks. So I am still contemplating whether to back away from the market soon..maybe in January after the Capricorn effect.

Go and pursue a business!

I am sure many of you out there must have thought about achieving financial freedom, if not why invest?

In my opinion, another way to achieve freedom (in addition to financial freedom) is to set up your own business.

Frankly, many big business start from really small start ups. For example in today's Life section, it talks about Mr Eldwin Chua, 32, a former Zi Char cook who now owns 8 restaurants including the $4 million taste Paradise at Ion Orchard. But we must also remember that route to success is never easy, and statistically, the odds are against us as 80% of companies will fail within 5 years of start up.

However, this should not deter us from trying. If solely based on this statistics, it means that if you own 5 business, at least one will continue after the 5 years! And like investing, a multi-bagger stock can potentially recoup all the losses from other stocks and give you a massive returns! The upward potential is limitless. (Not an accurate way of reading the statistics, but we should always be optimistic)

Therefore I am urging all those who have ideas and would like to pursue it to drop me an email at .We can discuss it through and see how it goes from there. But I can assure you that you will have 100% of my commitment, but I also expect the same from you.

Sunday, December 20, 2009

Back from Hong Kong

Above are some photos from my trip.

Some interesting observations that I made in Hong Kong are

  • People there are VERY interested in finance. You see people looking at stocks everywhere, a bunch of old people can be gathering near a small screen near an ATM machine looking at the jumping of the prices in the Hang Seng Index. Also, they have countless magazines talking about investment/money etc. The most amazing thing is that I saw an episode of a lecture on Technical Analysis from the Hong Kong University broadcasting on a Sunday Morning!
  • They have property rental shops everywhere! I believe this can be viable in Singapore. A physical presence will be very useful for expats who are coming to Singapore in search of a flat. The unique thing about these shops is that the company holds onto the keys of the flats, hence the customer can actually view all the flats immediately! This is similar to those in the UK.
  • People there trade car park lots like houses. A carpark lot actually comes with a title deed!
  • I am sure most of you who have been to Hong Kong have seen the dessert shop Xue Liu Shan. It is a dessert shop specializing in selling deserts that are made up of mangoes. I heard that there was a branch in Singapore a few years back, but it failed. I wondered what happened. But frankly, I do see a possible market for this dessert shop in Singapore. Only problem is the high price of the desserts.

Wednesday, December 9, 2009

Off to Hong Kong

I will flying over to Hong Kong for a short holiday and will give some insights and observations of the country.

Anyway, those of you who realized, the china penny stocks are surging like crazy over the last 2 days while the STI index is relatively stagnant...this is causing me to worry a little.

This is because, the last time this happened over a consistent period of time, i.e penny stocks surged while the blue chips are relatively stagnant, a major correction followed after it. This might be a signal that the market might correct soon. So set your stop losses!

I also believe that stop losses are important, even in 'long term investment', this is because I had a bad experience when I did not set my stop losses. (The reason is simple. A stock that drop 50%, needs to gain back 100% in order for you to break even. That's tough!)

Also, if you want to trade China stocks, I have a good stock in mind, ChinaMilk. This is researched by a friend of mine, BT. Just last week, it was trading at around 27 cents which I really wanted to buy in, because the company is actually holding around the equivilant of cash on hand. (meaning, if you can take over the company and liquidate it, you can get back around the same amount of $$, excluding their fixed assets and other stuff) The only thing that I worry is that their core business is doing REALLY badly, with revenue of some businesses dropping over 90%!

But frankly their cash on hand is really enticing. However the stock has started to run. In my opinion, just wait and not rush in. The stock might still run up, like all the other China stocks, but unless there is good reason to back it up, it is pure speculation and thus will definitely correct itself!