Saturday, September 26, 2015

Bear markets already started

The most obvious one.....

Hang Seng Index already plunged more than 24%

Singapore market also plunged by 20%

Can't imagine what will happen when S & P 500 and Dow Jones Industrial enter bear market.

Will these markets get even more depressed with another 20% down? Very likely.

What about KLCI which just entered in a correction territory despite of so much bad news such as 1MDB scandal created so much uncertainty and rapid Ringgit depreciation?

My view is worse is yet to come. I won't go posting a bear case everyday like what I did in 2007/2008 cycle. I will let the gravity rules - the markets will fall on its weight.

Just forget about the noise of 1MDB or Federal Reserves that keep everyone guessing on the timing of a rate hike.

Tuesday, August 11, 2015

Thursday, July 9, 2015

Wednesday, July 1, 2015

Long time no post

If you are a vivid follower of the stock market, the recent plunged of Shanghai stock market was due to deleveraging. It can just declined more than 20% in 2 weeks. The above chart looks scary to me. The margin is even higher than the tech bubble. It will be too late to run when the margin calls are here.

'Black Fridaysweeps over stock market

By Dai Tian ( 2015-06-26 16:34
'Black Friday' sweeps over stock market
Investor at a securities brokerage in Huaibei cityEast China's Anhui provinceJune 26, 2015. [Photo/IC]
Chinese stocks suffered a "Black Friday", with the ChiNext indexa Nasdaq-style board ofShenzhen-listed growth enterprisesplunging 8.9 percent as fears saw leveraged investorsjettison their holdings.
The benchmark Shanghai Composite Index dived 7.4 percent to 4,192.87 at the closeitssteepest fall in five monthswhile the Shenzhen Component Index slumped 8.2 percent to14,398.79.
"Signs of the market edging down have triggered panic among investorsmany of whom areleveraged and forced to close their position," said Yang Delongchief strategist at ChinaSouthern Asset Management.
Data showed pullback by leveraged trading as the outstanding balance of margin-debt at theShanghai Stock Exchange fell from a record high for a fourth day on Thursday to 1.42 trillionyuan ($229 billion).
"The market will remain volatile but likely to rebound if not in a short term," the strategist toldChina Dailyadding that it's too early to say the country's year-long bull market has peaked.
The market view diverged however as Morgan Stanley advised clients to refrain frominvesting in mainland shares in a report on Fridaysaying the top for the cycle has beenreached.
Nearly 2,000 stocks tumbled by the daily limit of 10 percent on Fridayamong whichtechnology shares and small companies led the rout.
"The decline is part of an automatic adjustment in response to the rapid surge earlier and isthe result of a market mechanismamplified by liquidity fluctuation and deleveraging," saidZhang Xiaojuna spokesman for the China Securities Regulatory Commissionat the weeklybriefing on Friday.
Despite the sharp correctionmarket liquidity is abundant and the economy has shownstronger signs of stable growthhe added.
The Shanghai gauge has surged nearly 30 percent since the beginning of this year and 124percent over the past year until Thursday.
"The deleveraging is healthier for the market after all," said Yangadding that he recommendsblue-chips whose valuations are below the historical level and defensive sectors such asbeverage and insurance stocks.
The CSI 300 Index slumped 7.9 percent to close at 4,336.20 on Friday.
Cai Xiao contributed to this story.

Thursday, May 7, 2015

When kings got dethroned.....

First, it was Bill Gross got dethroned as king of bonds and now we have Mark Mobious dethroned as king of emerging markets. Those basically believe in valuation practically got hammered and driven to the ground.

The End of Mark Mobius’s Reign as King of Emerging-Market Stocks

For a quarter of a century the name Mark Mobius has been synonymous with investing in developing markets. A bald, energetic, New York native who often dresses in white suits, Mobius is constantly tweeting and appearing on television from St. Petersburg to São Paulo encouraging investors to put money into fast-growing developing economies. A Mark Mobius comic book published in Asia in 2007 chronicled his globe-trotting exploits. (Really.) In the U.S. he was voted by his peers onto a list of the top 10 investors of the 20th century, putting him alongside Warren Buffett, Julian Robertson, and George Soros. What Bill Gross was to bonds, Mobius was to emerging markets: the King.
His reign may be coming to an end. Like Gross, Mobius, 78, has posted mediocre numbers in recent years and seen investors depart. While they still make money, 11 of the 13 largest funds that Mobius oversees at Franklin Templeton Investments have underperformed their benchmarks over the past five years. At his zenith in 2011, Mobius oversaw $39 billion. Today that figure is down to $26 billion. And in December, his flagship Asian Growth Fund lost its long-held position as the region’s largest to First State Investments’ Asia Pacific Leaders Fund. “He’s one of the few well-known managers in emerging markets,” says Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ. “Unfortunately, the track record is below average. Investors are more frustrated.”

There is only one kind of people that I know is making money now: traders and momentum traders.....If you don't belong to this special breed, be very careful. You can loose your shirt minus your pants....yes....pants(plural).

Sunday, May 3, 2015

Random thoughts on the markets

Waiting for major market corrections requires a lot of stamina. But I know if I give in now, I would really an idiot. Why?

Look at this chart.

S & P 500 is valued @ 21x PE ratio. Except the extreme bubble or of the chart during 2009 crisis, it is certainly at top of the valuation range. The median is 15 x. I always believe in reversion to mean.

KLCI is selling for 17 PE ratio. Again it is above the long term valuation and also at the top of trading range. Corporate earnings have been dissapointing. 

My only market that I used to be bullish while the rest of the world keep saying China was about to implode due to property bubble, crashing economy and shadow banking. As time goes by, my convictions were proven right. China is heading towards managed landing. China stock market is getting very pricey, close to 20x PE.

What is really worrisome the stock market is fuel by high school drop out and "da ma".

I don't think I am looking for the end of the world scenario but we certainly need a deep 20-30% corrections before the bull run can continue.

Please note that the cheap money is here to stay forever, is an illusion. Look the US unemployment is approaching full employment. It's close to 2006/2007 level.

Yet the interest rate stays ZERO?

No, it will not stay for long, at least not what 10 year treasury traders think. It starts to trend up.

To those who still swimming out there, just be careful. Just like Warren Buffett said: "A bull market is like sex. It feels best just before it ends."

Saturday, March 28, 2015


It was strange that I feel sad for a man whom I never met. Have not really even really read one of his greatest trilogy writings. Have heard about younger generations of Singaporean ranting for wanting more freedoms. Certainly have seen a successful Singapore, feel safe walking any where you want and getting a lot things done very fast.

If you want to know how much respect you got is what your people say about you when you are no longer around. Even Dr. M has something nice to say about him, in a personal way, Kuan Yew and I

What he has done inspired many third world countries to do the same. China was one of them. Deng Xiao Ping opened up China after a visit to Singapore. As a result of that, millions and millions of people were liberated from poverty. I am sure the world has also benefited from this multiplier effect.

The greatest criticism on him was authoritarian style. Many have also abused by saying a country can achieve what Singapore had achieved if they sacrifice some of their freedom. In a real world, it is not so simple.

I had a long walk this morning to think about this. My conclusion was, yes I don't mind to submit to a leader who is smart(1st class Cambridge graduate), a workaholics, 100% clean and like a candle that burning himself to light up the nation. That is why too, many tried the model, only a handful successful because some ingredients were missing. Thanks LKY.