Just for laughs

Things people do..haha.


Also, I got a feel that the market is going to drop in the next few days. It has risen TOOO fast over the Chinese new year, together with all the job cuts, the index has to drop. I am looking forward to load up STI ETF ( shall talk more about it soon. I have been researching on this recently). I will either load up when the index hit 1600 or around the end of the year., which ever comes first..

Styles of trading

Recently found an article talking about the stock market being a zero sum game. I.e. if someone profits from a stock, it would mean that someone else is losing money.

What was said in this article was actually quite simple. However I finally got some idea what people mean when they always say 'you should trade with a style that is suitable for you'.

Here are is the list of different 'positive trading style'. By positive, it means that people who trade with the expectation of making a profit. ( Yes, there are styles where the people do not have the intention to make a profit,but I will not list them here. If you would like to find out more, here is the link to the article. )




After seeing this table, what kind of style do you think you belong to?



*Credits given to Prof Lawrence Harris.

Link to the article can be found here ( taken from turtletrade.com , it is essentially a style of trading too)

Happy Chinese new year!

Hi to all, Happy Chinese new year!

Welcome to the year of the Ox! ( Which is also my year =) )

Anyway, I got gut feeling that the economy might not actually in the second half of the year as predicted by analyst and including myself. Why? because there are TOOOO many people predicting that it is going to recover around the second half of the year. ( Just read the straits times today,and you will realize this already )

The reason why I predicted the recovery will be around May 09 is due to technical analysis ( before any brokerage reports). I did my analysis based on past trends. I.e how long the economy usually take to recover from a recession. By predicting in May 09, I am actually taking the probability of the quickest recovery.

Therefore it will most likely, in my opinion recover either very soon, or early next year ( basically not in the second half of the year). The probability of a quick recover is actually very low, because all the 'help' from the various government has really yet to show. Therefore a high possibility of recovery would be next year. ( at least for the stock market, though i think the property market will be bad)

Therefore, I feel that the timing to buy stocks should START from June. Though we are not exactly at the bottom, but we should be closer to it than buying from now.

Last of all, have a good CNY! Enjoy all the food and the hong baos! =)

Singapore taps reserves for S$20.5b economic stimulus plan ( And my business idea )

Just in case those of you who have missed out on the info. Yup, you are right. Singapore is going to spend

S$20.5billion

for the economic stimulus plan, out of which S$4.9 billion is coming out from our reserves for the first time. Seems like the economic crisis is really bad this time round.

To keep things short, it is to help the lower income/middle group in terms of their tax reliefs like the individual income tax, property tax(only for homes that you occupy, hence the richer people with multiple homes do not benefit). But more importantly, it is targeted to helping companies.

Hence, it is technically the best time to set up a business, provided that you can find your niche. The lower corporate tax, the higher government guarantee and all the packages to help train workers. To me, it sounds like a possible business idea.

*picture taken from here


I am thinking of setting a business to educate people on personal finance . It may be similar to what a financial planner might be saying, but I am non bias, I don't get you to buy any products and I genuinely want to help you to save money. I am thinking of teaching simple facts like

• Power of compounding interest
• Places to make your money grow
• Ways to save money
• How to effectively make use of your CPF
• And other things that will be financially
  

Essentially what this blog is talking about. ( even though i have heard of a similar company, to me , it seems that that particular company is not marketing itself as aggressive as i would like to do it )

Also, since the government is providing funds to send workers for training, I might be able to tap on these funds..as companies can send their workers to learn about financial planning.

To add on, the government also intend to spend $9200 per student for the next 5 years, which I suppose are for enrichment courses.

Imagine charging a fee of $20/ person per session, but doing it on a large scale, say for example 30 students at a go and trying to target ALL schools/community centres/youth groups/enrichment courses 'add ons' etc.

Any comments from anyone? Or anyone who is keen on helping develop the idea?

Phillipcaptial Market Watch

I did not really find this video very informative this time round. However it seems like the stimulus package in the US is aiming more at the low to middle income. ( does this remind you of Singapore? )




Summary

• US personal expenditure has been dropping for 5 months ( consumption decrease)
  
• US personal savings have been going up since Aug
• Manufacturing has dropped
  
• The new stimulus package is aimed at low to middle income people with an emphasis on tax cuts.

The reason why Singapore was the first to go into a recession in Asia is due to our high dependency on the US economy, hence news of the US economy will ultimately affect us the most.

Now about some other things. If you all have been keeping up with earnings reporting, there is a majority of companies reporting losses. Which is actually a good thing. It is because it is 'performing' up to expectation of the market from 6 months ago. And if you also realized, the market is not really shaken by these reports already. This I feel is a sign that the bottom might be coming.

Also, like in my past posts, I mentioned about an increase in auctions. 'The Edge' Magazine also reported about this finding. It says that there are a lot of people attending these auctions, but most are not buying because they are afraid that the price will drop further. However the article also says that most of the time, people will wait till they miss the bottom and start buying only when the market is already mid way of its bubble. So in general if you think its cheap enough, it should be alright to buy. But in my opinion, wait till the end of the year first. The property market still has MUCH MUCH more to drop.

One more of my gut feel is being reported. Soy beans! The edge magazine has an article on it. Seems like it might start to get more coverage. Next thing before you know it, the price of it will be running like crazy. This is usually how prices of things run. First, people who have been doing their homework finds the good investments and start investing in them. Then there will be more coverage of such investments in order to lure more people into buying it. Hence the price will start running. And when the is about to burst, the people who are first to exit are the same people who entered it first.

How will oil move? 'Super Contango'

*Picture taken from http://www.theconservativesoldier.com/wp-content/uploads/2008/06/priceyoil.jpg


Contango is a term used in the futures market to describe an upward sloping forward curve (as in the normal yield curve ) ....From Wikipedia

Usually the price of oil futures ( price of buying oil in the future) are usually higher than spot prices ( present price of oil). This is because oil futures take into consideration the spot price, the cost to store the oil in the meantime and the opportunity cost of not collecting money for the futures till the expiry date.

Hence a simply arbitrage example could be as such. Spot price (today's price) could be $50/bbl. Future price for 6months time is $70. Cost of storing the oil for 6 months could be $10. Hence I can buy one barrel of oil at $50 today, store if for 6 months at a cost of $10. This will incur a total cost of $50+$10 = $60.
Concurrently, I will short the oil futures today at $70. Hence at the end of 6month, I will just have the deliver the oil i bought initially to close the contract. Profiting $70-$60=$10

Such examples are so simple that such opportunities usually do not last very long. However it is happening right now ( according to the article). Hence the article is trying to look deeper into what is happening with the oil market.

Possible reason of this occurrence: The easy oil storage places could be already full. Hence even if you have the money to store the oil, there is no place for you to store it. Hence we are not able to take advantage of this opportunity. Though this can be easily solved by the oil producing countries by not pumping so much oil now,and pump more when the prices go up, BUT they are not doing that. Why?.....

Reason: The oil countries are hard up for cash. So even if they don't earn much from each barrel of oil ( due to the drop of oil prices), all they have to do is sell more barrels of oil.

Here are some statistics :

Russia needs $70/bbl to balance its budget and current accounts. http://www.ft.com/cms/s/bbacc5ac-bc66-11dd-9efc-0000779fd18c,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F1%2Fbbacc5ac-bc66-11dd-9efc-0000779fd18c.html&_i_referer=

Venezuela needs $60 to balance its 2009 budget, which is a belt-tightening for Chavez. http://www.economist.com/world/americas/displaystory.cfm?story_id=12853975

Saudi Arabia needs $49 to balance its budget. http://www.bloomberg.com/apps/news?pid=20602099&sid=aoDi6KxVnBR0&refer=energy

In all: We are expecting oil prices to go up, as the oil producing countries NEED the cash. So those of you who have the same belives, you might want to conside these 2 oil ETF to long

1. USO - United States Oil Fund (USO US)
2. Double-long Crude Oil Fund (DXO US)

Link to the article : http://economistsview.typepad.com/economistsview/2009/01/super-contango.html

SPH unexpected investment loss

Facts first :

1. Profit after tax and minority interest (PATMI) drop 35% Year-on year ( YOY) to S$73m ( first since 1Q03)
2. Mostly due to S$33.7m losses in marked to market (MTM) on investment portfolio, mostly in externally managed funds
3. Printing revenue ( core business) drops

My analysis ( some assumption because I did not look at the balance sheets) :

• From point 1 above, it implies that the previous year's PATMI is around S$112m.
• Assuming there is no MTM loss, the PATMI for the current year should be S$73+S$33.7 = S$106.7m
• This implies there is additional loss of profits from other factors like the advertisements of around S$112-S$106.7 = S$5.3m
• From what I know, the cost of placing advertisements in the straits times has increased by many times over the years.
• Hence for the total revenue to stay the same, it means that there are actually fewer people placing ads in the newspaper. ( i.e. there is a lack of supply of people wanting to put ads)
• With the crisis slowing creeping into Singapore, I would expect lesser people wanting to put ads, and hence this is going to affect their operating profits even more.
• However on the other hand, MTM loss is really just 'The act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.' ( taken from Wikipedia)
• Hence its more of a paper loss. Meaning if the market to recover, this MTM will defintely contribute to the 'profits of the company.

In all it seems that SPH's is really diversifying its business into property and investments. If you have faith in their investments ( which are causing the MTM losses ), it might be a good time to buy this stock.

As for the ads revenue, it will not be THAT bad, but i feel that for SPH to grow even more and give shareholders more value, we should be looking more at their investments and property business.