It is sometimes hard to act with integrity, and so, I find this story personally inspiring. Apparently, the author is unknown. Have a Good Weekend!
_________________
A while back, there was a story about Reuben Gonzolas, who was in the final match of his first professional racquetball tournament.
He was playing the perennial champion for his first shot at a victory on the pro circuit.
At match point in the fifth and final game, Gonzolas made a super "kill shot" into the front corner to win the tournament.
The referee called it good, and one of the linemen confirmed the shot was a winner.
But after a moment's hesitation, Gonzolas turned and declared that his shot had skipped into the wall, hitting the floor first.
As a result, the serve went to his opponent, who went on to win the match.
Reuben Gonzolas walked off the court; everyone was stunned.
The next issue of a leading racquetball magazine featured Gonzolas on its cover.
The lead editorial searched and questioned for an explanation for the first ever occurrence on the professional racquetball circuit.
Who could ever imagine it in any sport or endeavor?
Here was a player with everything officially in his favor, with victory in his grasp, who disqualifies himself at match point and loses.
When asked why he did it, Gonzolas replied, "It was the only thing I could do to maintain my integrity."
Friday, July 25, 2008
Thursday, July 24, 2008
Trading FKLI, FCPO
This article is dedicated to "starter" and fellow chatters who has asked me about trading futures.
Disclaimer: I am not an experienced futures trader - I have only opened my first futures account recently, although I have known about futures for an extremely long time. If you are a newbie, futures are definitely much riskier than stocks. This article is mainly about one type of risks of trading futures. Like all risks, if you don't manage them well, I believe you will eventually suffer losses. If any part of my article is incorrect, do feel free to let me know.
___________________
“Nine out of ten (futures) traders go bust in their first year” – Dr Alexander Elder
There is no question that trading futures is sexy, alluring and simply irresistable!
Once you’ve had the sweet taste of success, you think the market is tailor made for you. You feel you just discovered a free ATM machine!
However, like stock trading, we shouldn't extrapolate our initial success indefinitely into the future. Trading results (like investing) should be measured over long term, if not life-time. Buffett is fond of saying - as you multiply 25 x 24 x 23 x ... x 0, the end result is always zero. With futures, you must always watch out for that zero.
So, to me, there is no starker statement than what Dr Alexander Elder stated above.
90% of all futures trader go bust in their first year of trading.
Yes, 90%!
Yes, Go bust! Not just 10% loss, but 100% loss of capital.
Simply unbelievable isn't it?
I too felt skeptical when I first read this.
After all, 90% is a very large number. And we are not talking about small loss, but "go bust". Is this figure true?
Well, I'm not Dr Alexander Elder, so, I won't try to explain on his behalf. I also don't have a pHD degree, so, I won't pretend to have the facts.
But allow me to walk you through - day by day - a specific scenario that actually happened in Bursa recently.
This is not hypothetical, but real past “live” prices.
If you were physically long on FCPO from Friday July 18 to Wednesday July 23, then, you will automatically know what I mean. If not, then, continue reading.
__________________
Ok. Let's imagine you are a futures newbie. You’ve eyed FCPO for some time. You’ve traded plantation stocks like IOICORP, ASIATIC, etc. successfully using Technical Analysis, even during this bear market. Yes, let's ass-u-me you are already an A-grade (if not a high B-grade) stock trader.
You obviously know CPO prices drive future plantation stock earnings and prices. You cast an eye on past CPO prices. You know CPO prices peaked earlier this year to over $4,400+, and you recalled a certain Minister said he expected CPO prices to average around $3,500 this year.
Day 0 - Thursday, July 17
And let’s pretend today is Thursday, July 17, 9 PM, i.e. after market closing. You've just finished dinner, and do your usual routine looking at EOD charts. You called up FCPO daily chart, and it looked like this:
The first thing that strikes you is the beautiful uptrend over the past couple of years. This particular one is long, since 16 August 2007. You're excited because Thursday’s closing price seems to rest on this uptrend line.
You know that technically, if the uptrend holds, there's a good chance to buy FCPO “on the cheap” tomorrow. More often than not, it worked in past stock trading. You get excited, and want to hit FCPO hard the next day.
Let say you had allocated an initial capital of $80,000 to trade futures.
You know the initial margin for FCPO is $8,000 per contract. It means you can buy 1 contract and if you hold it overnight, you'll need to deposit an $8,000 margin with the broker, assuming the price did not move against you.
And just for the purpose of this article, let say you think like a few of the investors in my chatbox. (you might not, but let's ass-u-me)
You "like to plunge in" with stocks with at least 50% of your capital. Your reasoning is that you like to “maximize utilizing your capital”. You believe "greed is good". To you, capital that remains in cash is “a waste” because “it’s not really doing anything or not earning anything”.
So, you might not agree with just using 50% of capital, but let's assume this first. This means you plan to use $40k (=50% x $80,000 capital) to buy 5 FCPO contracts. In theory, you can control 10 contracts, but let's be prudent and say you control just 5 contracts.
And so, you have decided to call your broker the next morning, to buy 5 FCPO contracts at market open.
Day 1 – Friday July 18.
Your order was given to the broker, and filled at market open. Your 5 contracts were filled at $3,397 and you feel excited! Mentally, you calculate that if the price goes back to $3,500, that’s over $100 profit per contract. Since every $1 FCPO is equivalent to $25, this means $100 is equivalent to $2,500 per contract. And 5 contracts is $12,500. Which means if the price move up modestly to $3,500, you just made $12,500! Or 15.6% return on capital from just one trade! And if the price move up to $3,700, the % returns are simply phenomenal!
Anyway ... per your normal stock trading style, you wait.
Intraday prices moved up and down and closed $3,392 on Friday night.
That’s just $5 below your entry of $3,397, so, you are not too worried yet. That night, crude oil closed near support also, you also noticed soyoil also found support, so, you are not worried going into the weekend. As expected, the additional margin will come on Monday July 21, i.e. 5 contracts x $7 x $25 = $825, making your total margin of $40,000 + $825 = $40,825. You are only 51% invested, with 49% cash. No problem.
You slept well over the weekend.
Day 2 – Monday July 21
At 10.25 AM, you start observing pre-market FCPO prices and got a shocked! At 10.30 AM, FCPO market opened at $3,320!
Since your entry was $3,397, it means you just lost $77 right from the opening!
Your immediate reaction might be … WTF!! Didn’t soyoil found support over the weekend? Wasn’t crude stable?
If you are a new trader, it might take you some time to realize that $77 = $77 x $25 x 5 contracts = $9,625 lost! Which is a lot of money already lost from holding overnight!
And you just used $40,000 to start with!
So, that’s 24% (= 9,625 / 40,000) loss on that trade!
The question now is what do you do? Sell immediately to cut loss? Or hold, and hope for a rebound?
If you are a pure stock trader, chances are you will rarely, if ever experienced this before. Stock prices rarely gapped down 24% at the open, if you’ve stick to trading sound, fundamental, blue chip stocks like IOICORP or ASIATIC.
I believe chances are you will do nothing if at 10.30 AM, you haven't got a clue where your stop loss is. Even if you have, if you are not experienced in cutting losses, you might "freeze" because the fall is quite large, but not completely large enough yet. You will most likely "hope" and rationalize that maybe - if you don't panic and if you exercise emotional control - the price might go up. You might even tell yourself – “if the price don't go up and keep going down, I'm going to wait till bottom, then, I’ll buy some more to average down. Then, when it move up, I’ll get out”.
So, you waited for the rest of the day …
And at 6 PM, Monday closing price is $3,260. Another 60 point loss from Monday Open of $3,320.
It means your total unrealized loss is now = $3,397 - $3,260 = $137 per contract. That’s $137 x $25 x 5 = $17,125! Or 43% unrealized loss on initial trade margin of $40,000!
But you console yourself that it's still unrealized. You might even think "a loss is not a loss until it's realized" ... or ... "there’s still a chance it might go up right?" ... or … "After all, this is just a knee-jerk reaction right?"
Anyway, on Tuesday, you must cough up more dough for margins. Your total margin is now $40,000 + $17,125 = $57,125. Suddenly, you cash balance seems a lot smaller, even though you started with 50% only.
Day 3 – Tuesday, July 22
10.25 AM - you stared nervously at the monitor. Not nice to be down 43% in just 2 days.
Pre-market prices came in around $3,230 … !!! OMG!!
Another $30 fall from Monday closing of $3,260, right at the open!
What should you do? Get out? Do nothing? Don’t panic? Emotional control?
Again, you might be thinking "... I already lost $137 per contract, what’s another $30 more?" ... So, you might do nothing.
And later that day, Tuesday close is $3,252, which is $22 higher than the open!
You felt relieved!
You didn't panic and cut loss!
So, you congratulated yourself that you exercised emotional control.
You console yourself that maybe the downtrend is over. You might say "... Most of the sellers have sold already, and now, the price can only go up .... After all, $3,252 is a very low price compared to $3,500! "
You went to sleep that night, feeling excited.
Day 4 - Wednesday, July 23.
10.25-10.30 AM. Pre market opening = $3,210!!! OMG!
Another $42 loss from Tuesday closing! Why?? What happened?? How come?? Did Malaysia CPO just got bombed??
Ok. Calm down. Reflect for a moment calmly.
If you’ve gone through Day 2 (Mon) and Day 3 (Tue) without selling, chances are you probably also froze and not sell Wednesday opening. From the "lesson" learned on Day 3 (Tue), you will not panic. On Day 3, closing turned out higher than opening, so, you "hope" price will move up later, just like what it did on Day 3.
And unfortunately, your luck ran out.
On Day 4, the price hardly moved up after opening, and just plunged down rapidly. The CPO price made new lows, and every time it tried to rally, it’s a weak rally so far below the opening price …
The closing turned out to be the lowest point at $3,027!!
Yes. By Day 4, unrealized loss stands at $3,397 - $3,027 = $370 per contract!
Additional margin required is $370 x $25 x 5 = $46,250!
When added to the initial margin of $40,000, it means the new total margin is now $86,250.
Unfortunately, you don’t have $86,250!
You started with only $80,000 just 4 trading days ago!
You are now faced with an extremely difficult position.
Either you come up with additional money ($6,250), or your broker will be forced to sell all 5 contracts come Day 5.
And the trouble is you don’t even know what the forced sale price will be!
Now, FCPO price of $3,000 might look cheap to you, if you “anchor” against the $3,500 that the Minister said. But if you look at the charts long enough, in 2006, the price didn’t even go past $2,000 … So, is $3,000 cheap? Or is $2,000 cheap?
In short, I believe no one can accurately predict with any certainty, how low FCPO price can go down to.
And you have an immediate problem. You must either come up with extra cash, or be forced out of your position.
What do you do?
You might think of the implications under forced selling.
Force sell scenario
Let say the forced sale price is $2,900.
If this happens, what is the total loss?
Realized loss = $3,397 - $2,900 = $497 per contract. Equivalent loss = $497 x $25 x 5 = $62,125. Commissions = 6 x $25 = $150. Total deduction = $62,125 + $150 = $62,275. That's 156% loss from initial trade margin of $40,000!
And your cash balance is left with $80,000 - $62,275 = $17,725!!
In short, if you are forced out at $2,900, you just lost 78% from just 1 trade that lasted 4 days!!!
Remaining capital is only 22%!!!
Just 1 “unlucky entry” on Friday, and you might not even make it by end of this month!
Let’s not even talk about surviving 1 year!
Now, can you see why Elder says that 90% of futures traders go bust in the first year of trading?
But what if you cough up another $6,250 margin?
Additional margin scenario
The thing about doing this is that you must make sure you understand what happens if the price continue to move against you. Let say the price move another $100 against you, how much more margin can you meet? Will you have enough cash?
And what if it falls all the way down to $2,700? $2,500?
Will you still have cash to just meet margins?
Do you think you will have enough cash to “average down”?
Review time
Now, losing 156% in a single trade of just 4 days is emotionally wrecking!
In stocks, the most you lose is just 100% and even that is extremely rare for stocks like IOICORP or ASIATIC.
So, where did you go wrong?
Is it due simply to unlucky entry on Friday? (But your chart say your entry on the "bounce" of uptrend line is good odds).
Or is this simply due to inaction over the last 4 days? (But in stock trading, you can afford to hold and wait for bottom to appear).
Was the initial position size of 5 contracts too large? (But you thought it only used up 50%, and not big enough initially)
Should you have gotten out on the very first day on Monday morning at the open, when premarket showed that you've made a huge mistake?
Or should you have gotten out on Friday evening, i.e. every trade is intraday and no carry over night positions?
Was it wrong to hold the trade overnight on Friday? (If you always did that, will you earn the big money from long-term position trades? If sometimes you hold overnight, sometimes you don't, when and how do you decide to hold or not hold overnight?)
Or should you have cut loss when the loss first exceed your tolerance limit? Did you decide on the initial stop loss before you put on the entry trade on Friday?
etc.
These are extremely tough questions to answer if you don’t have a successful trading experience. In fact, if you don't know your stop loss point before you entered the trade, I believe you have no business trading futures. If you don't know whether your stop loss is set carefully in relation to the charts, and in relation to your capital, you should avoid futures.
Some concluding thoughts
It should be obvious that to survive in futures markets, you must adapt to futures and not blindly follow stock trading strategies.
Unlike stocks, futures requires additional margins when price moves against you. So, you can quickly lose and lose a lot more than your initial margin if you blindly hang on to your losing contracts.
What appears to be a small utilization of capital at Day 0, can quickly cause you to go bust by Day 4 or 5. In my live example above, just a week, and you've gone bust.
And this is even before you even had the chance to “average down”!
So, know your stop loss before entry.
The first loss is usually the best loss, because if the "break-out" turns out to be a strong trend move against you, you are dead if you try to average down. A trend can last longer than you can predict, and you don't want to be around holding the wrong end of the stick when a trend first broke out against you.
If you still believe futures can give you easy money, then, make sure you are fully prepared as best as you can. Have you tried live paper trading? Have you back-tested your Entry and Exit rules on a day-by-day basis? If you have, and you are eager to trade live, then, my next best advise is to limit your capital to an amount that you can afford to lose completely. By now, you should know chances are high that you will lose 100% of that capital within the first year. So, set aside a small % such as 1% or not more than 5% of your total capital as initial capital. Be prepared to lose all of this.
I hope you will not fall in the 90% category, but the exceptional 10% group who still have a capital by end of the year. However, if you belong to the 90% statistics, then, promise yourself that if this happens, stop trading. Walk away. Go back to paper trading. Go back to live back-testing. Write down everything you learn. Review from that entire experience. Make sure you know how to act differently the next time. And if you're unwilling to do all this, then, just walk away and chalk that entire experience up to "life lessons".
As you trade every day, keep a trading journal. Write down your trade details. Your entry, exit, position size reasons. Your overnight holding reasons. Print out the charts, and arrow the entry and exit points, and study carefully. I kid you not, that you must be seriously professional about this, if you want to survive the first year.
And no matter how large your capital is, just trade 1 contract at a time. 1 contract to enter, 1 contract to exit. Your goal in the first year should not be to make big bucks, but to just survive. And to consistently grow equity. You're learning a new market, and your immediate goal is to acquire new skills. When you have excelled, the money will come.
Always have a stop loss in mind before you put your entry trade. Tell that to your broker after your entry is confirmed. Keep your maximum loss to no more than 2% of your capital. Price moves extremely quickly in futures - expect large slippage, plan for it.
I feel one should avoid FCPO when one first start trading futures. Unlike FKLI, FCPO is full of larger opening gaps. I believe they can either make or break you if you don't know how to take advantage of them ... Also, FKLI initial margin requirement is smaller, at $4,000 per contract.
If you find even one out of the points I mentioned here new, or surprising, then, consider the possibility that you might not be ready yet to trade futures.
Someone will always tell you futures are exciting. That futures will make you fast money. Someone will post comments and messages like “wow, today’s range is 100 points. That’s $2,500 per contract profit opportunity”. Or messages like … “Today, I caught 50 points!”.
But the reality is that futures is high risk / high return / high loss market.
Many tend to forget that for every $ win, there is a loser who has lost more than $1, because it is a negative sum game after subtracting transaction and other costs.
So, when you hear messages like $2,500 per contract profit opportunity, remember that someone else must have lost $2,500 per contract! You don't want to be that party that lost.
I think I'll stop here since this rambling is very long.
My best advise is if you find yourself having to ask others whether you should trade futures or not, then, take this as a sign to avoid futures because chances are good you are simply not yet ready.
Take care.
Disclaimer: I am not an experienced futures trader - I have only opened my first futures account recently, although I have known about futures for an extremely long time. If you are a newbie, futures are definitely much riskier than stocks. This article is mainly about one type of risks of trading futures. Like all risks, if you don't manage them well, I believe you will eventually suffer losses. If any part of my article is incorrect, do feel free to let me know.
___________________
“Nine out of ten (futures) traders go bust in their first year” – Dr Alexander Elder
There is no question that trading futures is sexy, alluring and simply irresistable!
Once you’ve had the sweet taste of success, you think the market is tailor made for you. You feel you just discovered a free ATM machine!
However, like stock trading, we shouldn't extrapolate our initial success indefinitely into the future. Trading results (like investing) should be measured over long term, if not life-time. Buffett is fond of saying - as you multiply 25 x 24 x 23 x ... x 0, the end result is always zero. With futures, you must always watch out for that zero.
So, to me, there is no starker statement than what Dr Alexander Elder stated above.
90% of all futures trader go bust in their first year of trading.
Yes, 90%!
Yes, Go bust! Not just 10% loss, but 100% loss of capital.
Simply unbelievable isn't it?
I too felt skeptical when I first read this.
After all, 90% is a very large number. And we are not talking about small loss, but "go bust". Is this figure true?
Well, I'm not Dr Alexander Elder, so, I won't try to explain on his behalf. I also don't have a pHD degree, so, I won't pretend to have the facts.
But allow me to walk you through - day by day - a specific scenario that actually happened in Bursa recently.
This is not hypothetical, but real past “live” prices.
If you were physically long on FCPO from Friday July 18 to Wednesday July 23, then, you will automatically know what I mean. If not, then, continue reading.
__________________
Ok. Let's imagine you are a futures newbie. You’ve eyed FCPO for some time. You’ve traded plantation stocks like IOICORP, ASIATIC, etc. successfully using Technical Analysis, even during this bear market. Yes, let's ass-u-me you are already an A-grade (if not a high B-grade) stock trader.
You obviously know CPO prices drive future plantation stock earnings and prices. You cast an eye on past CPO prices. You know CPO prices peaked earlier this year to over $4,400+, and you recalled a certain Minister said he expected CPO prices to average around $3,500 this year.
Day 0 - Thursday, July 17
And let’s pretend today is Thursday, July 17, 9 PM, i.e. after market closing. You've just finished dinner, and do your usual routine looking at EOD charts. You called up FCPO daily chart, and it looked like this:
The first thing that strikes you is the beautiful uptrend over the past couple of years. This particular one is long, since 16 August 2007. You're excited because Thursday’s closing price seems to rest on this uptrend line.
You know that technically, if the uptrend holds, there's a good chance to buy FCPO “on the cheap” tomorrow. More often than not, it worked in past stock trading. You get excited, and want to hit FCPO hard the next day.
Let say you had allocated an initial capital of $80,000 to trade futures.
You know the initial margin for FCPO is $8,000 per contract. It means you can buy 1 contract and if you hold it overnight, you'll need to deposit an $8,000 margin with the broker, assuming the price did not move against you.
And just for the purpose of this article, let say you think like a few of the investors in my chatbox. (you might not, but let's ass-u-me)
You "like to plunge in" with stocks with at least 50% of your capital. Your reasoning is that you like to “maximize utilizing your capital”. You believe "greed is good". To you, capital that remains in cash is “a waste” because “it’s not really doing anything or not earning anything”.
So, you might not agree with just using 50% of capital, but let's assume this first. This means you plan to use $40k (=50% x $80,000 capital) to buy 5 FCPO contracts. In theory, you can control 10 contracts, but let's be prudent and say you control just 5 contracts.
And so, you have decided to call your broker the next morning, to buy 5 FCPO contracts at market open.
Day 1 – Friday July 18.
Your order was given to the broker, and filled at market open. Your 5 contracts were filled at $3,397 and you feel excited! Mentally, you calculate that if the price goes back to $3,500, that’s over $100 profit per contract. Since every $1 FCPO is equivalent to $25, this means $100 is equivalent to $2,500 per contract. And 5 contracts is $12,500. Which means if the price move up modestly to $3,500, you just made $12,500! Or 15.6% return on capital from just one trade! And if the price move up to $3,700, the % returns are simply phenomenal!
Anyway ... per your normal stock trading style, you wait.
Intraday prices moved up and down and closed $3,392 on Friday night.
That’s just $5 below your entry of $3,397, so, you are not too worried yet. That night, crude oil closed near support also, you also noticed soyoil also found support, so, you are not worried going into the weekend. As expected, the additional margin will come on Monday July 21, i.e. 5 contracts x $7 x $25 = $825, making your total margin of $40,000 + $825 = $40,825. You are only 51% invested, with 49% cash. No problem.
You slept well over the weekend.
Day 2 – Monday July 21
At 10.25 AM, you start observing pre-market FCPO prices and got a shocked! At 10.30 AM, FCPO market opened at $3,320!
Since your entry was $3,397, it means you just lost $77 right from the opening!
Your immediate reaction might be … WTF!! Didn’t soyoil found support over the weekend? Wasn’t crude stable?
If you are a new trader, it might take you some time to realize that $77 = $77 x $25 x 5 contracts = $9,625 lost! Which is a lot of money already lost from holding overnight!
And you just used $40,000 to start with!
So, that’s 24% (= 9,625 / 40,000) loss on that trade!
The question now is what do you do? Sell immediately to cut loss? Or hold, and hope for a rebound?
If you are a pure stock trader, chances are you will rarely, if ever experienced this before. Stock prices rarely gapped down 24% at the open, if you’ve stick to trading sound, fundamental, blue chip stocks like IOICORP or ASIATIC.
I believe chances are you will do nothing if at 10.30 AM, you haven't got a clue where your stop loss is. Even if you have, if you are not experienced in cutting losses, you might "freeze" because the fall is quite large, but not completely large enough yet. You will most likely "hope" and rationalize that maybe - if you don't panic and if you exercise emotional control - the price might go up. You might even tell yourself – “if the price don't go up and keep going down, I'm going to wait till bottom, then, I’ll buy some more to average down. Then, when it move up, I’ll get out”.
So, you waited for the rest of the day …
And at 6 PM, Monday closing price is $3,260. Another 60 point loss from Monday Open of $3,320.
It means your total unrealized loss is now = $3,397 - $3,260 = $137 per contract. That’s $137 x $25 x 5 = $17,125! Or 43% unrealized loss on initial trade margin of $40,000!
But you console yourself that it's still unrealized. You might even think "a loss is not a loss until it's realized" ... or ... "there’s still a chance it might go up right?" ... or … "After all, this is just a knee-jerk reaction right?"
Anyway, on Tuesday, you must cough up more dough for margins. Your total margin is now $40,000 + $17,125 = $57,125. Suddenly, you cash balance seems a lot smaller, even though you started with 50% only.
Day 3 – Tuesday, July 22
10.25 AM - you stared nervously at the monitor. Not nice to be down 43% in just 2 days.
Pre-market prices came in around $3,230 … !!! OMG!!
Another $30 fall from Monday closing of $3,260, right at the open!
What should you do? Get out? Do nothing? Don’t panic? Emotional control?
Again, you might be thinking "... I already lost $137 per contract, what’s another $30 more?" ... So, you might do nothing.
And later that day, Tuesday close is $3,252, which is $22 higher than the open!
You felt relieved!
You didn't panic and cut loss!
So, you congratulated yourself that you exercised emotional control.
You console yourself that maybe the downtrend is over. You might say "... Most of the sellers have sold already, and now, the price can only go up .... After all, $3,252 is a very low price compared to $3,500! "
You went to sleep that night, feeling excited.
Day 4 - Wednesday, July 23.
10.25-10.30 AM. Pre market opening = $3,210!!! OMG!
Another $42 loss from Tuesday closing! Why?? What happened?? How come?? Did Malaysia CPO just got bombed??
Ok. Calm down. Reflect for a moment calmly.
If you’ve gone through Day 2 (Mon) and Day 3 (Tue) without selling, chances are you probably also froze and not sell Wednesday opening. From the "lesson" learned on Day 3 (Tue), you will not panic. On Day 3, closing turned out higher than opening, so, you "hope" price will move up later, just like what it did on Day 3.
And unfortunately, your luck ran out.
On Day 4, the price hardly moved up after opening, and just plunged down rapidly. The CPO price made new lows, and every time it tried to rally, it’s a weak rally so far below the opening price …
The closing turned out to be the lowest point at $3,027!!
Yes. By Day 4, unrealized loss stands at $3,397 - $3,027 = $370 per contract!
Additional margin required is $370 x $25 x 5 = $46,250!
When added to the initial margin of $40,000, it means the new total margin is now $86,250.
Unfortunately, you don’t have $86,250!
You started with only $80,000 just 4 trading days ago!
You are now faced with an extremely difficult position.
Either you come up with additional money ($6,250), or your broker will be forced to sell all 5 contracts come Day 5.
And the trouble is you don’t even know what the forced sale price will be!
Now, FCPO price of $3,000 might look cheap to you, if you “anchor” against the $3,500 that the Minister said. But if you look at the charts long enough, in 2006, the price didn’t even go past $2,000 … So, is $3,000 cheap? Or is $2,000 cheap?
In short, I believe no one can accurately predict with any certainty, how low FCPO price can go down to.
And you have an immediate problem. You must either come up with extra cash, or be forced out of your position.
What do you do?
You might think of the implications under forced selling.
Force sell scenario
Let say the forced sale price is $2,900.
If this happens, what is the total loss?
Realized loss = $3,397 - $2,900 = $497 per contract. Equivalent loss = $497 x $25 x 5 = $62,125. Commissions = 6 x $25 = $150. Total deduction = $62,125 + $150 = $62,275. That's 156% loss from initial trade margin of $40,000!
And your cash balance is left with $80,000 - $62,275 = $17,725!!
In short, if you are forced out at $2,900, you just lost 78% from just 1 trade that lasted 4 days!!!
Remaining capital is only 22%!!!
Just 1 “unlucky entry” on Friday, and you might not even make it by end of this month!
Let’s not even talk about surviving 1 year!
Now, can you see why Elder says that 90% of futures traders go bust in the first year of trading?
But what if you cough up another $6,250 margin?
Additional margin scenario
The thing about doing this is that you must make sure you understand what happens if the price continue to move against you. Let say the price move another $100 against you, how much more margin can you meet? Will you have enough cash?
And what if it falls all the way down to $2,700? $2,500?
Will you still have cash to just meet margins?
Do you think you will have enough cash to “average down”?
Review time
Now, losing 156% in a single trade of just 4 days is emotionally wrecking!
In stocks, the most you lose is just 100% and even that is extremely rare for stocks like IOICORP or ASIATIC.
So, where did you go wrong?
Is it due simply to unlucky entry on Friday? (But your chart say your entry on the "bounce" of uptrend line is good odds).
Or is this simply due to inaction over the last 4 days? (But in stock trading, you can afford to hold and wait for bottom to appear).
Was the initial position size of 5 contracts too large? (But you thought it only used up 50%, and not big enough initially)
Should you have gotten out on the very first day on Monday morning at the open, when premarket showed that you've made a huge mistake?
Or should you have gotten out on Friday evening, i.e. every trade is intraday and no carry over night positions?
Was it wrong to hold the trade overnight on Friday? (If you always did that, will you earn the big money from long-term position trades? If sometimes you hold overnight, sometimes you don't, when and how do you decide to hold or not hold overnight?)
Or should you have cut loss when the loss first exceed your tolerance limit? Did you decide on the initial stop loss before you put on the entry trade on Friday?
etc.
These are extremely tough questions to answer if you don’t have a successful trading experience. In fact, if you don't know your stop loss point before you entered the trade, I believe you have no business trading futures. If you don't know whether your stop loss is set carefully in relation to the charts, and in relation to your capital, you should avoid futures.
Some concluding thoughts
It should be obvious that to survive in futures markets, you must adapt to futures and not blindly follow stock trading strategies.
Unlike stocks, futures requires additional margins when price moves against you. So, you can quickly lose and lose a lot more than your initial margin if you blindly hang on to your losing contracts.
What appears to be a small utilization of capital at Day 0, can quickly cause you to go bust by Day 4 or 5. In my live example above, just a week, and you've gone bust.
And this is even before you even had the chance to “average down”!
So, know your stop loss before entry.
The first loss is usually the best loss, because if the "break-out" turns out to be a strong trend move against you, you are dead if you try to average down. A trend can last longer than you can predict, and you don't want to be around holding the wrong end of the stick when a trend first broke out against you.
If you still believe futures can give you easy money, then, make sure you are fully prepared as best as you can. Have you tried live paper trading? Have you back-tested your Entry and Exit rules on a day-by-day basis? If you have, and you are eager to trade live, then, my next best advise is to limit your capital to an amount that you can afford to lose completely. By now, you should know chances are high that you will lose 100% of that capital within the first year. So, set aside a small % such as 1% or not more than 5% of your total capital as initial capital. Be prepared to lose all of this.
I hope you will not fall in the 90% category, but the exceptional 10% group who still have a capital by end of the year. However, if you belong to the 90% statistics, then, promise yourself that if this happens, stop trading. Walk away. Go back to paper trading. Go back to live back-testing. Write down everything you learn. Review from that entire experience. Make sure you know how to act differently the next time. And if you're unwilling to do all this, then, just walk away and chalk that entire experience up to "life lessons".
As you trade every day, keep a trading journal. Write down your trade details. Your entry, exit, position size reasons. Your overnight holding reasons. Print out the charts, and arrow the entry and exit points, and study carefully. I kid you not, that you must be seriously professional about this, if you want to survive the first year.
And no matter how large your capital is, just trade 1 contract at a time. 1 contract to enter, 1 contract to exit. Your goal in the first year should not be to make big bucks, but to just survive. And to consistently grow equity. You're learning a new market, and your immediate goal is to acquire new skills. When you have excelled, the money will come.
Always have a stop loss in mind before you put your entry trade. Tell that to your broker after your entry is confirmed. Keep your maximum loss to no more than 2% of your capital. Price moves extremely quickly in futures - expect large slippage, plan for it.
I feel one should avoid FCPO when one first start trading futures. Unlike FKLI, FCPO is full of larger opening gaps. I believe they can either make or break you if you don't know how to take advantage of them ... Also, FKLI initial margin requirement is smaller, at $4,000 per contract.
If you find even one out of the points I mentioned here new, or surprising, then, consider the possibility that you might not be ready yet to trade futures.
Someone will always tell you futures are exciting. That futures will make you fast money. Someone will post comments and messages like “wow, today’s range is 100 points. That’s $2,500 per contract profit opportunity”. Or messages like … “Today, I caught 50 points!”.
But the reality is that futures is high risk / high return / high loss market.
Many tend to forget that for every $ win, there is a loser who has lost more than $1, because it is a negative sum game after subtracting transaction and other costs.
So, when you hear messages like $2,500 per contract profit opportunity, remember that someone else must have lost $2,500 per contract! You don't want to be that party that lost.
I think I'll stop here since this rambling is very long.
My best advise is if you find yourself having to ask others whether you should trade futures or not, then, take this as a sign to avoid futures because chances are good you are simply not yet ready.
Take care.
Friday, July 18, 2008
Crude Oil Chart Update
Penning this 7:41 AM, 18 July, 2008.
Last night turns out to be a critical day for crude (August 2008 contract). To me, the important $132 support was broken, and touched a low of $129, before closing $129.29. Next support seen at $120-$122, and the next one at $109-$110, etc.
I believe some if not many longer-term traders will have set their stop at around $130 (plus minus $2) last night. If so, many should have been taken out of their long position already. Technically, this is a breakout on the downside, and some traders will have joined the bandwagon on the short side too last night (and the prudent ones with stops). The extent of the downfall over the last 3 days is quite massive, taking out nearly $17-$18. This is no small fall and in my opinion - has changed the long term character of the chart. Of course, prices almost never fall in a straight line (except in panics and even then ...) - you can expect rebounds soon - but on most people's minds now is whether crude will be able to surpass $148 again in the next few months.
The price chart below should say it all.
Naturally, the US markets cheered the fall in crude, by rising strongly for 2 days in a row. European markets closed in decent green as well last night. I expect Asian markets to follow.
Saturday, July 12, 2008
Parkson Trade Update, Grepstrader, Tom Boleh and Samgang on Trading Advice
Disclaimer: Skip this article, if you are not interested in Parkson rebound trade or the topic. The reason I wrote this follow-up article is because at least 2 TA bloggers have blogged contrary positions to my July 4 article.
____________
July 4 Alert is not a Buy Call for Novice
A week ago (Friday, 4 July), I posted a quick article at lunch time, after Parkson price hit $4.24 bottom in the morning here - http://fusioninvestor.blogspot.com/2008/07/parkson-observations.html. After my alert, Parkson could be bought at around $4.34-$4.38 (Reference price). As a trader, I backed my views with my own money with stop loss, prior to posting that article.
I would like to share with you two quotes from that lunch article:
"Parkson HK is now at a critical level. If the support breaks, we could see more falls ahead. On the other hand, if in the less likely event that it recovers, the buy at $4.24 this morning might turn out to be very cheap indeed.
To me, this market is more suited to a trader with a successful sell stop discipline, than an investor, due to the high level of uncertainty surrounding Parkson HK's future prospects over the rest of this year and quite possibly the next year."
Comments from Tom Boleh - another TA Blogger
Tom was a lot more explicit and has a much stronger position. On the same day after I posted (July 4), he also posted a counter-article on the same date July 4. His full article is here - http://talkandsharemah.blogspot.com/2008/07/darlie-singh-you-are-wrong.html. His actual words are
"STAY AWAY FROM PARKSON!! Applying Livermore's and other trend traders' "Buy High, Sell Low", stay the freaking way out of Parkson. Please take a look at the chart below:".
Naturally, I was surprised. I haven't followed his blog before, but I couldn't see his past articles prior to June. Perhaps he is also another new blogger.
What I find interesting is that Tom, Grepstrader and myself were looking at the same TA chart for Parkson on July 4.
Yet, all 3 of us have different interpretations of what to do with that same chart!
Grepstrader says to wait and buy at $4.52 on July 7.
Tom says to avoid it at all cost.
I went in to buy below the reference price of $4.34-$4.38, with a stop loss.
So, who is the Trader and who is the chartist?
And more importantly - Are all TA traders the same? (*Grin*)
__________________
Since we are talking about Tom Boleh's blog article of July 4, I would like to take this opportunity to comment and advise on the other aspects of his article.
Point 1 - Tom's Blog
Firstly Tom, I would greatly appreciate it if you could just refer to me as "Seng". Not Darlie Singh. This goes to everyone who reads this post. For me, the joke is wearing thin, so, I would appreciate your support and understanding.
Second, as you know, Samgoss is the creator of "Darlie Singh" in his blog. I just want to point out what should be obvious to most people, that there are actually 2 different Darlie Singh there.
The first "Singh" - copied and pasted from my chatbox - is supposed to be me. At first glance, he appears to just replace my name "Seng" with "Singh". I have no idea if he has copied faithfully, or have applied creative editing. He has certainly applied creative commentary. I personally find some of that slightly distasteful, and just ignored it.
The second "Darlie Singh" - who provided comments under his articles - is DEFINITELY NOT me, contrary to what others have asked me before in my cbox (e.g. newbie). I would definitely use my own handle "Seng" if I want to comment in Sam's blog. You will definitely know it is me.
Now, it begs the question who would want to pose as me in Sam's blog. Well, let me ask you. Why did Sam write articles attacking me? Who would then want to pose as me and mislead others that it is me? For me, I have a reasonably good idea who that imposter is, based on a number of factors. But I'm really not interested in discussing this question. I know you know who it is. And I know that Sam knows that I know who it is. And to me, that's all that matters.
Tom, I hope you don't mind that I used your published opinions here as example. At the end of the day, your opinion of whether I am right or wrong on July 4 doesn't matter to me with an open trade. In the final analysis, only Mr Market matters to me. And if Parkson price falls to my trailing stop loss, I will not hesitate to execute.
I trust this article is clear. If not, feel free to drop a comment.
Cheers!
____________
July 4 Alert is not a Buy Call for Novice
A week ago (Friday, 4 July), I posted a quick article at lunch time, after Parkson price hit $4.24 bottom in the morning here - http://fusioninvestor.blogspot.com/2008/07/parkson-observations.html. After my alert, Parkson could be bought at around $4.34-$4.38 (Reference price). As a trader, I backed my views with my own money with stop loss, prior to posting that article.
I would like to share with you two quotes from that lunch article:
"Parkson HK is now at a critical level. If the support breaks, we could see more falls ahead. On the other hand, if in the less likely event that it recovers, the buy at $4.24 this morning might turn out to be very cheap indeed.
To me, this market is more suited to a trader with a successful sell stop discipline, than an investor, due to the high level of uncertainty surrounding Parkson HK's future prospects over the rest of this year and quite possibly the next year."
This is NOT an explicit and categorical Buy Call. I deliberately didn't scream out a Buy. Instead, I deliberately point out both possibilities of price rising and price falling. Why?
Because we are still in the middle of a long-term Bear market. If you are a new trader, if you cannot execute sell stop, or if you don't know when to exit yourself, you will more likely than not be killed if you attempt this rebound trade and wait for others to tell you when to exit ... I certainly have no intention to hold a new trader's hands all the way from entry to exit. I prefer to share with you some key concepts on how I fish, than to give you a fish.
Further, if you are a seasoned trader, you should know what to do after reading my post. I expect the seasoned trader to call up Parkson charts himself without me prompting him, study the charts himself, and then, make his own decision on whether to buy or stand aside. It appears at least 2 TA bloggers have done this.
And I'm definitely not recommending the long-term investor to buy now, because I believe it is possible for prices to make new lows later, in a longer-term Bear market.
So, what has happened over the last week after my July 4 alert?
On July 11 (Friday), Parkson closed $4.56, after touching a high of $4.60. If you had bought at $4.36, there is a 20 sen profit after a few days. And I have taken some profits. (*Grin*).
It's nice to see Mr Market proving me right, although I consider this lucky since I thought the odds were tilted towards lower prices (and I was prepared to execute the stop loss if this happens).
I had expected the price to be "choppy", i.e. "volatile sideways".
So, I did play partial "ping pong" with this counter the whole of last week (July 4 to July 11). Sell some $4.48, Rebuy $4.42, Sell $4.48 again, Rebuy $4.40/$4.42, Sell 4.48, Rebuy some $4.56 (breakout buy with new stop loss), and my current open position is 50% of peak. All this in a short space of 6 trading days.
Which is why I could never hold a new trader's hand.
___________
Comments from "grepstrader" - a TA blogger
Interestingly, on July 5 (a day after my post), I received 2 comments from "gt". His comment was "Nice view about Parkson, you guys can check also another view about Parkson ...". Full article here - http://grepstrader.blogspot.com/2008/07/parkson-chart.html.
At first reading, he didn't appear to agree with my analysis. His first 3 points are bearish - that should put most people off Parkson despite my article. His 4th point was ... "for stocks crazy people"... "Buy anything above friday hammer close and the target at most 5.20/5.50 level.". .
Since July 4 close was $4.48, he is calling a buy at the open on July 7 at $4.50 or higher. He supplemented his call with this phrase "Meaning if u guys buy around 4.52 n ..."
Well, after his explicit Buy call (for "stock crazy people"), Parkson fell to a low of $4.38, before closing $4.56. I am not exactly sure what is his stop. In fact, I didn't see him explicitly discussing the Risk, but only the Reward based on Target Profit. To me, this is risky for new traders, since new traders typically only consider the Reward but not the Risk. I note with interest that the blog viewer was below 1,000 when I first saw the article, which suggest to me that grepstrader is probably a relatively new blogger.
________________
Comments from Tom Boleh - another TA Blogger
Tom was a lot more explicit and has a much stronger position. On the same day after I posted (July 4), he also posted a counter-article on the same date July 4. His full article is here - http://talkandsharemah.blogspot.com/2008/07/darlie-singh-you-are-wrong.html. His actual words are
"STAY AWAY FROM PARKSON!! Applying Livermore's and other trend traders' "Buy High, Sell Low", stay the freaking way out of Parkson. Please take a look at the chart below:".
Naturally, I was surprised. I haven't followed his blog before, but I couldn't see his past articles prior to June. Perhaps he is also another new blogger.
What I find interesting is that Tom, Grepstrader and myself were looking at the same TA chart for Parkson on July 4.
Yet, all 3 of us have different interpretations of what to do with that same chart!
Grepstrader says to wait and buy at $4.52 on July 7.
Tom says to avoid it at all cost.
I went in to buy below the reference price of $4.34-$4.38, with a stop loss.
So, who is the Trader and who is the chartist?
And more importantly - Are all TA traders the same? (*Grin*)
__________________
Since we are talking about Tom Boleh's blog article of July 4, I would like to take this opportunity to comment and advise on the other aspects of his article.
Point 1 - Tom's Blog
When I first saw Tom's July 4 article yesterday, I was naturally surprised. It was only later that I noticed the sub-title of his blog.
It says "Market Talks, Tips, Rumors. Bullshit. Showoff. A Subsidiary Blog of TalkOnlyMah.Blogspot.Com"
Kakakaka ... I had to chuckle when I saw the phrase "subsidiary blog".
However, my sincere advice to Tom - if he wants to improve his trading skills - stay away from Tips, Rumors, Bullshit and Showoff.
Don't rely on Tips, learn how to fish yourself.
Don't listen to Rumors, learn how to enter and exit a trade yourself.
Don't bullshit, try to seek the Truth.
Don't show off, try to be humble. Especially to Mr Market.
These are just my advice. It's up to you whether you want to take it. I find it inspiring to see young men with big dreams like Jesse Livermore. I wish you all success in your future endeavour Tom.
_______________
Point 2 - Darlie Singh
I don't want to talk too long about this.Firstly Tom, I would greatly appreciate it if you could just refer to me as "Seng". Not Darlie Singh. This goes to everyone who reads this post. For me, the joke is wearing thin, so, I would appreciate your support and understanding.
Second, as you know, Samgoss is the creator of "Darlie Singh" in his blog. I just want to point out what should be obvious to most people, that there are actually 2 different Darlie Singh there.
The first "Singh" - copied and pasted from my chatbox - is supposed to be me. At first glance, he appears to just replace my name "Seng" with "Singh". I have no idea if he has copied faithfully, or have applied creative editing. He has certainly applied creative commentary. I personally find some of that slightly distasteful, and just ignored it.
The second "Darlie Singh" - who provided comments under his articles - is DEFINITELY NOT me, contrary to what others have asked me before in my cbox (e.g. newbie). I would definitely use my own handle "Seng" if I want to comment in Sam's blog. You will definitely know it is me.
Now, it begs the question who would want to pose as me in Sam's blog. Well, let me ask you. Why did Sam write articles attacking me? Who would then want to pose as me and mislead others that it is me? For me, I have a reasonably good idea who that imposter is, based on a number of factors. But I'm really not interested in discussing this question. I know you know who it is. And I know that Sam knows that I know who it is. And to me, that's all that matters.
_____________________
Point 3 - "The war is launched by Samson against Darlie Singh as usual, but the attacks getting fierce."
Firstly, let me say this clearly that there is NO war between Sam and me. I repeat. No war. Why?
Well, if there is a "war" then, we would be going at each other's throats immediately.
In a war, countries must launch an "all out attack" against the enemy, to prevent the enemy from inflicting damage on them. "Inaction" or "late action" will have very serious casualties as your enemies hit you first. So, you must inflict damage first and quickly right?
So, how about this instance? Is there really such a need for me to launch "an immediate and all out attack" on Sam? Have you seen me firing retaliatory permanent articles? If not, why not?
To answer these questions, let me ask you more questions:
First, is my survival and financial well-being threatened by Sam's articles? What about those around me - the investment community at large and Malaysians at large? Are their survival and financial well-being threatened by Sam's articles so strongly that I must wage a war against Sam?
Second, what could possibly be the benefit of me waging a war against Sam? How will this benefit the investment community and Malaysians at large? Is the benefit so large that I must wage a war against Sam?
I think the answer is obvious. There's no need.
In the context of Malaysia or the investment community, who is Sam? Is he like our BN MPs who are corrupt and pockets Rakyat's monies? Is he like our MSM who distorts the truth to over millions of Malaysians? Are Sam's readers as easily fooled?
Certainly, by all means, wage a war against Corruption in our country. I strongly urge you to join those who are currently waging a war against Corruption in the Net. Wage a war against MSM when they only report propoganda to millions of Malaysians. Wage a war against the corrupt politicians, MPs, judiciary, AG, IGP, Police and everyone else who abuse their power and positions for selfish reasons, at the expense of Rakyat's survival and financial well-being.
But please lar ... don't expect me to wage a war against Sam. It's not like I'm that free a person with no other responsibilities. And why should I care what Sam thinks of me?
To me, it is sufficient that I alone know the true nature of Sam as an individual. You will learn - as you get older - that you can tell a lot about the nature of a person by their words and actions.
And let me ask you this question also - does Sam consider me a "threat"? Is his survival threatened from my presence? Is his financial well-being threatened? Those around him threatened? If not, then is he waging a war at me? I trust everyone here is intelligent enough to answer these questions for themselves.
So, let me repeat it here. I am not at war with Sam. On the contrary, I am at peace with Sam.
And the reality is that there is only one person in this world who can control Sam. And that is Sam himself. Sam is already an adult, not a 16 year old minor. I trust one day, he will realize the folly of his actions, and be mature enough to do the right thing.
Peace be with him and everyone here.
________________
Point 4 - "Maybe the support will hold, maybe it will break resistance, maybe it has bottomed... " Sounds familiar? I said a lot these kind of maybe shits. My apology, I have learned that there is no maybe in TA, just strict entry or exit."
You have misquoted me in your blog.
The reason I said that is to illustrate my belief that future prices are unpredictable. I.e. I am not that smart enough to be able to make 100% accurate predictions on future prices over the near term.
Which means, to me, I must trade with a stop loss (an initial stop loss and a rising trailing stop loss) in such a situation (my July 4 article). Why? Because "Maybe the support will hold, maybe it will break resistance, maybe it has bottomed... "
But what is more important to understand is that the "maybe's" did not result in inaction in my part. Instead, I put my own money on the table on July 4 prior to publishing my article. The "maybe's" forced me to know my stop level, BEFORE I put on the trade. And it forced me to raise my trailing stops when the move works with me.
Anyway, I hope you were NOT looking for me to hold your hand, in terms of specific Entry Level, Exit Level and Stop Loss. For rebound short term trades, I don't give out free fishes.
But if you like to learn how to fish, then, feel free to join my chatbox. I'll be happy to chat.
_______________
Point 5 - "Seng, You Are Wrong!
Just a short note to say that in the final analysis, when you put on a trade, the opinions of others simply doesn't matter at all.Tom, I hope you don't mind that I used your published opinions here as example. At the end of the day, your opinion of whether I am right or wrong on July 4 doesn't matter to me with an open trade. In the final analysis, only Mr Market matters to me. And if Parkson price falls to my trailing stop loss, I will not hesitate to execute.
I trust this article is clear. If not, feel free to drop a comment.
Cheers!
Friday, July 11, 2008
Ah Beng Jokes for the Weekend
Someone I know forwarded this to me. I had a good laugh when I first read it, so, I thought it should be shared.
Enjoy, and have a Happy Weekend!
_________________
Ah Beng bought a new mobile.
He sent a message to everyone from his Phone Book & said,'My Mobile No. Has changed.
"Earlier it was Nokia 3310. Now it is 6610"
_________________
Ah Beng : I am a Proud dad, coz my son is in Medical College.
Friend: Really, what is he studying.
Ah Beng: No, he is not studying, they are Studying him.
_________________
Ah Beng : Doctor, in my dreams, I play football every night.
DR: Take this tablet, you will be ok.
Ah Beng : Can I take tomorrow, tonight is final game.
_________________
Ah Beng : If I die, will u remarry?
Wife: No! I'll stay with my sister. But if I die will u remarry?
Ah Beng : No, I'll also stay with your sister.
_________________
Ah Beng : People consider me as a 'GOD'
Wife: How do you know??
Ah Beng : When I went to the Park today, everybody said, Oh GOD! U have come again.
_________________
Ah Beng complained to the police: 'Sir, all items are missing, except the TV in my house.'
Police: 'How come the thief did not take TV?'
Ah Beng : 'I was watching TV news...'
_________________
Ah Beng comes back 2 his car & find a note saying 'Parking Fine'
He writes a note and sticks it to a pole 'Thanks for complement.'
_________________
How do you recognize Ah Beng in School ?
He is the one who erases the notes from the book when the teacher erases the board.
_________________
Once Ah Beng was walking and he had a glove on one hand and not on other.
So the man asked him why he did so.
He replied that the weather forecast announced that on one hand it would be cold and on the other hand it would be hot.
_________________
Ah Beng is in a bar and his cellular phone rings.
He picks it up and says 'Hello, how did you know I was here?'
_________________
Ah Beng : Why are all these people running?
Man - This is a race, the winner will get the cup
Ah Beng - If only the winner will get the cup, why are others running?
_________________
Teacher: 'I killed a person. Convert this sentence into future tense'
Ah Beng : The future tense is 'u will go to jail'
_________________
Ah Beng told his servant: 'Go and water the plants!'
Servant: 'It's already raining.'
Ah Beng : 'So what? Take an umbrella and go.'
_________________
A man asked Ah Beng why Ahmad Badawi goes walking in the evening and not in the morning.
Ah Beng replied "Ahmad Badawi is PM not AM"
Enjoy, and have a Happy Weekend!
_________________
Ah Beng bought a new mobile.
He sent a message to everyone from his Phone Book & said,'My Mobile No. Has changed.
"Earlier it was Nokia 3310. Now it is 6610"
_________________
Ah Beng : I am a Proud dad, coz my son is in Medical College.
Friend: Really, what is he studying.
Ah Beng: No, he is not studying, they are Studying him.
_________________
Ah Beng : Doctor, in my dreams, I play football every night.
DR: Take this tablet, you will be ok.
Ah Beng : Can I take tomorrow, tonight is final game.
_________________
Ah Beng : If I die, will u remarry?
Wife: No! I'll stay with my sister. But if I die will u remarry?
Ah Beng : No, I'll also stay with your sister.
_________________
Ah Beng : People consider me as a 'GOD'
Wife: How do you know??
Ah Beng : When I went to the Park today, everybody said, Oh GOD! U have come again.
_________________
Ah Beng complained to the police: 'Sir, all items are missing, except the TV in my house.'
Police: 'How come the thief did not take TV?'
Ah Beng : 'I was watching TV news...'
_________________
Ah Beng comes back 2 his car & find a note saying 'Parking Fine'
He writes a note and sticks it to a pole 'Thanks for complement.'
_________________
How do you recognize Ah Beng in School ?
He is the one who erases the notes from the book when the teacher erases the board.
_________________
Once Ah Beng was walking and he had a glove on one hand and not on other.
So the man asked him why he did so.
He replied that the weather forecast announced that on one hand it would be cold and on the other hand it would be hot.
_________________
Ah Beng is in a bar and his cellular phone rings.
He picks it up and says 'Hello, how did you know I was here?'
_________________
Ah Beng : Why are all these people running?
Man - This is a race, the winner will get the cup
Ah Beng - If only the winner will get the cup, why are others running?
_________________
Teacher: 'I killed a person. Convert this sentence into future tense'
Ah Beng : The future tense is 'u will go to jail'
_________________
Ah Beng told his servant: 'Go and water the plants!'
Servant: 'It's already raining.'
Ah Beng : 'So what? Take an umbrella and go.'
_________________
A man asked Ah Beng why Ahmad Badawi goes walking in the evening and not in the morning.
Ah Beng replied "Ahmad Badawi is PM not AM"
Thursday, July 10, 2008
Are all Traders the same?
Over a year ago, I wrote an article sharing with new readers primarily, my own understanding of various terms like investor, trader, speculator, etc. - http://fusioninvestor.blogspot.com/2007/05/master-and-novice-investor-trader.html The main point in that article is actually a simple one - regardless of investing style (or profession), there will be novices at one extreme, and serious professionals and Masters at the other extreme. After all, we know there are good badminton players vs lousy one, good tennis players vs lousy ones, etc. so, why can’t there be good investors vs lousy ones, good traders vs lousy ones, good speculators vs lousy ones as well?
However, you may be surprised to hear that there is still much confusion about traders around in the real world as well as within the Net.
Let me give you a few examples.
“Traders only earn a few hundred bucks a month, if any”.
“Traders lose money in the long run” (this one is obviously a generalization).
“Traders change their minds all the time”.
“Traders always chase after hot stocks and likes volatility”.
“Traders only play speculative stocks and avoid fundamentally sound stocks”.
“Traders use charts only”
And so forth. (You're welcome to share your favorite generalization here :-) )
Whilst containing some truths in each one of them, are any one of the above statements necessarily true for all traders? Are all traders the same? Obviously, when phrased in this manner, I’m sure nearly everyone – if they pause and think for a while – will say of course not.
Yet we continue to hear such statements being made all the time. I suppose this is inevitable. As human beings, we like to simplify things, and so, we generalize. It’s easier to have one rule, than to keep many complex rules in mind. However, we must also understand that when we generalize – if left unchecked - it can progress to become a strong bias, prejudice or stereotyping, which if continues to be left unchecked, could lead to discrimination, racism and even fanaticism, before we even realize this in ourselves.
For example:
Are all traders the same?
Are all Policeman the same?
Are all politicians the same?
Are all Malays (or Chinese or Indians or Ibans or Kadazans) the same?
Are all Jews the same?
Food for thought? :-)
Anyway, since this is mainly an investment blog, let’s talk a little bit more about the topic – are all Traders the same?
In such an instance, it might be easier if we approach the question from another angle. For example, let’s ask the question – how are Traders different from one another? Yes, let’s ass-u-me for a moment that the statement is incorrect and ask “how can Traders be different from one another”.
Interestingly, when you start to think in this manner, you’ll discover that there are actually, many, many, many differences between Traders.
For example, you may point out to difference in general skill level per my previous article, i.e. Master vs Novice Traders.
But is that all? Is this all there is?
What about “Entry Rules” – can they not have different types of Entry rules? (e.g. buy on breakout, buy on pullback, buy on impulse, etc.)
What about “Exit Rules” – can they not have different types too? (e.g. sell on breakout, sell on strength, sell on stops, etc.)
What about “Position Sizing Rules” – can they not have different types too? (e.g. % of capital, % risk, etc.)
What about “Starting Capital”?
Expected Returns (5%? 10%? 20%? 50%? 100%?)
Acceptable Drawdowns (5% capital? 10%? 50%? 80%?)
Types of markets traded? (stocks, futures, options, forex, Bursa, Hang Seng, overseas, etc.)
Execution methods (Telephone? Internet, Direct Access, Retailer, Funds, etc.)?
Trading tools? (Stock data, business information, charts, etc.)
Time-frame? (yearly, monthly, weekly, daily, hourly, 10 minutes?)
Turnover? (10%, 100%, 1000% per annum)
Etc.
In short, can they not have different Trading systems, different Trading plans, different Trading strategy, approach, objectives, etc.?
And what about the difference between an “Investor” and a Trader? If someone is a successful Investor who hold stocks for many years and almost never sell, is this person necessarily different from a “Trader” with a monthly or even yearly time-frame who also happens to own stocks for many years?
Or what about the generalization that “All Traders use charts for entry and exits”.
Is this true 100% of the time?
Can a Trader not use chart but buy and sell using Fundamental criteria such as P/E range? Or use speculative criteria such as expectations of underlying factors that will impact earnings in a major manner? (see my previous article on Speculator). Or some other criteria?
I believe one can be a Trader without using the standard Price / Volume charts, although in my opinion, it is not optimal. It would be like trying to screw something using a manual screwdriver, instead of an electric one. It can be done, but this is not what professionals use every day when building or renovating houses.
A related question to the above is - is there just one optimal way of investing or trading?
But this would make this article even longer.
So, let me stop here, and wish you "Happy thinking".
However, you may be surprised to hear that there is still much confusion about traders around in the real world as well as within the Net.
Let me give you a few examples.
“Traders only earn a few hundred bucks a month, if any”.
“Traders lose money in the long run” (this one is obviously a generalization).
“Traders change their minds all the time”.
“Traders always chase after hot stocks and likes volatility”.
“Traders only play speculative stocks and avoid fundamentally sound stocks”.
“Traders use charts only”
And so forth. (You're welcome to share your favorite generalization here :-) )
Whilst containing some truths in each one of them, are any one of the above statements necessarily true for all traders? Are all traders the same? Obviously, when phrased in this manner, I’m sure nearly everyone – if they pause and think for a while – will say of course not.
Yet we continue to hear such statements being made all the time. I suppose this is inevitable. As human beings, we like to simplify things, and so, we generalize. It’s easier to have one rule, than to keep many complex rules in mind. However, we must also understand that when we generalize – if left unchecked - it can progress to become a strong bias, prejudice or stereotyping, which if continues to be left unchecked, could lead to discrimination, racism and even fanaticism, before we even realize this in ourselves.
For example:
Are all traders the same?
Are all Policeman the same?
Are all politicians the same?
Are all Malays (or Chinese or Indians or Ibans or Kadazans) the same?
Are all Jews the same?
Food for thought? :-)
Anyway, since this is mainly an investment blog, let’s talk a little bit more about the topic – are all Traders the same?
In such an instance, it might be easier if we approach the question from another angle. For example, let’s ask the question – how are Traders different from one another? Yes, let’s ass-u-me for a moment that the statement is incorrect and ask “how can Traders be different from one another”.
Interestingly, when you start to think in this manner, you’ll discover that there are actually, many, many, many differences between Traders.
For example, you may point out to difference in general skill level per my previous article, i.e. Master vs Novice Traders.
But is that all? Is this all there is?
What about “Entry Rules” – can they not have different types of Entry rules? (e.g. buy on breakout, buy on pullback, buy on impulse, etc.)
What about “Exit Rules” – can they not have different types too? (e.g. sell on breakout, sell on strength, sell on stops, etc.)
What about “Position Sizing Rules” – can they not have different types too? (e.g. % of capital, % risk, etc.)
What about “Starting Capital”?
Expected Returns (5%? 10%? 20%? 50%? 100%?)
Acceptable Drawdowns (5% capital? 10%? 50%? 80%?)
Types of markets traded? (stocks, futures, options, forex, Bursa, Hang Seng, overseas, etc.)
Execution methods (Telephone? Internet, Direct Access, Retailer, Funds, etc.)?
Trading tools? (Stock data, business information, charts, etc.)
Time-frame? (yearly, monthly, weekly, daily, hourly, 10 minutes?)
Turnover? (10%, 100%, 1000% per annum)
Etc.
In short, can they not have different Trading systems, different Trading plans, different Trading strategy, approach, objectives, etc.?
And what about the difference between an “Investor” and a Trader? If someone is a successful Investor who hold stocks for many years and almost never sell, is this person necessarily different from a “Trader” with a monthly or even yearly time-frame who also happens to own stocks for many years?
Or what about the generalization that “All Traders use charts for entry and exits”.
Is this true 100% of the time?
Can a Trader not use chart but buy and sell using Fundamental criteria such as P/E range? Or use speculative criteria such as expectations of underlying factors that will impact earnings in a major manner? (see my previous article on Speculator). Or some other criteria?
I believe one can be a Trader without using the standard Price / Volume charts, although in my opinion, it is not optimal. It would be like trying to screw something using a manual screwdriver, instead of an electric one. It can be done, but this is not what professionals use every day when building or renovating houses.
A related question to the above is - is there just one optimal way of investing or trading?
But this would make this article even longer.
So, let me stop here, and wish you "Happy thinking".
Wednesday, July 9, 2008
Blog Capsule: bullbear vs Moolah on PBBANK
The background is we were discussing a rather passionate topic close to our hearts which is Selling.
The primary participants are bullbear vs Moolah. Related participants are myself, dorraidd, and a few others.
bullbear is of the position that for a stock like PBBANK, one would only need to buy and hold forever. He does have a qualification that provided the fundmentals don't deteriorate, and his timing appears to be to wait until there is confirmed deterioration.
In fact, from past discussions, bullbear indicated that he is inspired by his friends who has successfully held stocks for many, many years (the impression given is that it is decades). He also doesn't believe that he can market time successfully. For example, when asked why he didn't sell now, he says he thinks that we are already 2/3rd through the bear market and there is only 1/3rd left to go. He qualifies that he doesn't really know from memory.
bullbear naturally and strongly believe in this Buy and Hold view, and thinks it applies to many other stocks as well, that may range in 100 (?), so long as it meets his requirement. Unfortunately, I don't know exactly his requirement, but I welcome him to comment on it if he wants to elaborate further.
On the other hand, we have Moolah who looks at the situation from a different angle.
From his perspective, there are at least 2 reasons to sell PBBANK today, or as soon as possible.
The reference price is $10.1.
His reasons are: 1. When viewed over the last decade, we are smacked right in the middle of a GLOBAL Bear market. The belief is that bull markets rarely comes to Malaysia (about once every few years or decades), and when the bear starts, they will not immediately stop. The implication is that things will get worse, and PBBANK will be dragged down with the rest of the stocks. 2. The stock suffers a potential risk that it is highly dependent on certain large shareowner and founder still around. Since he is not getting younger even though everyone wants him to live forever, the risks of him leaving gets increasingly higher as he ages.
Hence, this experiment.
Treat this like a Blog Capsule.
Let's open this email again in 2 years time from now to see who is right.
Will it be bullbear - the advocate of Buy and Hold i.e. in 2 years time, PBBANK will be higher than $10.1?
Or will it be Moolah - the advocate that there is a time to sell, and the time around now would seem close. (I think he prefers higher, but he believes deep in his heart that even now, the time is to sell). I.e. in 2 years time, PBBANK will not be significantly higher than $10.1, and more likely to be lower than $10.1?
I guess, in this case, only time will tell, although I of course do have my own opinion ... :-)
Take care.
The primary participants are bullbear vs Moolah. Related participants are myself, dorraidd, and a few others.
bullbear is of the position that for a stock like PBBANK, one would only need to buy and hold forever. He does have a qualification that provided the fundmentals don't deteriorate, and his timing appears to be to wait until there is confirmed deterioration.
In fact, from past discussions, bullbear indicated that he is inspired by his friends who has successfully held stocks for many, many years (the impression given is that it is decades). He also doesn't believe that he can market time successfully. For example, when asked why he didn't sell now, he says he thinks that we are already 2/3rd through the bear market and there is only 1/3rd left to go. He qualifies that he doesn't really know from memory.
bullbear naturally and strongly believe in this Buy and Hold view, and thinks it applies to many other stocks as well, that may range in 100 (?), so long as it meets his requirement. Unfortunately, I don't know exactly his requirement, but I welcome him to comment on it if he wants to elaborate further.
On the other hand, we have Moolah who looks at the situation from a different angle.
From his perspective, there are at least 2 reasons to sell PBBANK today, or as soon as possible.
The reference price is $10.1.
His reasons are: 1. When viewed over the last decade, we are smacked right in the middle of a GLOBAL Bear market. The belief is that bull markets rarely comes to Malaysia (about once every few years or decades), and when the bear starts, they will not immediately stop. The implication is that things will get worse, and PBBANK will be dragged down with the rest of the stocks. 2. The stock suffers a potential risk that it is highly dependent on certain large shareowner and founder still around. Since he is not getting younger even though everyone wants him to live forever, the risks of him leaving gets increasingly higher as he ages.
Hence, this experiment.
Treat this like a Blog Capsule.
Let's open this email again in 2 years time from now to see who is right.
Will it be bullbear - the advocate of Buy and Hold i.e. in 2 years time, PBBANK will be higher than $10.1?
Or will it be Moolah - the advocate that there is a time to sell, and the time around now would seem close. (I think he prefers higher, but he believes deep in his heart that even now, the time is to sell). I.e. in 2 years time, PBBANK will not be significantly higher than $10.1, and more likely to be lower than $10.1?
I guess, in this case, only time will tell, although I of course do have my own opinion ... :-)
Take care.
FB30ETF: Beating the Market?
THE OLD TIMERS of this chatbox will know that I have been a long-time proponent of ETF for investors with little or no knowledge (whether new or old).
If you don’t know what is an ETF, this is a 3 letter acronym for "Exchange Traded Funds". Basically, these are passively managed funds with minimal expenses, i.e. the manager who manages the fund is not permitted to engage in active trading. Instead, the ETF goal is to simply track the performance of a Benchmark Index, with minimal “tracking error”. This is done by simply buying the Index component shares and holding them until such time when the Component Shares are altered. The Manager then swaps the shares in line with the change in the Index component. That’s pretty much the extent of trading done in those funds, which is almost none. Most of the time, the Manager just twiddle his/her thumb and does nothing, relative to his Actively Managed Fund counter-part.
Anyway, in the specific case of FB30ETF, the Benchmark Index is the FTSE Bursa Malaysia Large 30 Index, which comprise of the largest 30 stocks in Bursa Malaysia by market capitalization.
In reality, there will be some very small differences between the actual ETF performance vs the Benchmark Index. This is because the ETF is an actual physical fund with running costs (such as operating, accounting, compliance, reporting, share swapping, and other costs). Notwitstanding the above, FB30ETF’s goal is to achieve a performance over time, with a correlation of 95% or better between the Fund's portfolio NAV and the Benchmark Index.
Also, there can be differences between market price of the ETF, and its theoretical value, although Mr Market should in theory correct such mispricings.
Why FB30ETF can beat the average Market Participant?
It is counter-intuitive, but the majority of stock market participants do not beat the market after fees and expenses. Various research studies have shown that approximately 70%-80% of stock market participants simply don’t beat the market after fees and taxes. Yes, the majority do NOT beat market.
If you don’t know what is an ETF, this is a 3 letter acronym for "Exchange Traded Funds". Basically, these are passively managed funds with minimal expenses, i.e. the manager who manages the fund is not permitted to engage in active trading. Instead, the ETF goal is to simply track the performance of a Benchmark Index, with minimal “tracking error”. This is done by simply buying the Index component shares and holding them until such time when the Component Shares are altered. The Manager then swaps the shares in line with the change in the Index component. That’s pretty much the extent of trading done in those funds, which is almost none. Most of the time, the Manager just twiddle his/her thumb and does nothing, relative to his Actively Managed Fund counter-part.
Anyway, in the specific case of FB30ETF, the Benchmark Index is the FTSE Bursa Malaysia Large 30 Index, which comprise of the largest 30 stocks in Bursa Malaysia by market capitalization.
In reality, there will be some very small differences between the actual ETF performance vs the Benchmark Index. This is because the ETF is an actual physical fund with running costs (such as operating, accounting, compliance, reporting, share swapping, and other costs). Notwitstanding the above, FB30ETF’s goal is to achieve a performance over time, with a correlation of 95% or better between the Fund's portfolio NAV and the Benchmark Index.
Also, there can be differences between market price of the ETF, and its theoretical value, although Mr Market should in theory correct such mispricings.
Why FB30ETF can beat the average Market Participant?
It is counter-intuitive, but the majority of stock market participants do not beat the market after fees and expenses. Various research studies have shown that approximately 70%-80% of stock market participants simply don’t beat the market after fees and taxes. Yes, the majority do NOT beat market.
Since ETF are passively managed with the lowest fees amongst all types of equity funds, they track market performance pretty well. And that by definition, beats the majority of the stock market players!
Advantages of ETF
Besides beating the majority of stock market players including the professionals ...
Advantages of ETF
Besides beating the majority of stock market players including the professionals ...
1. No Fundamental Analysis required. Yes! You can throw away Balance Sheets, Income Statements, Cashflow Statements, and anything to do with FA! That's right - throw them away, and no need to even worry about not understanding the difference between earnings vs cashflow, or how to identify a "strong" Balance Sheet, or how to assess future prospects of a company, etc.! Investing in ETF is a no-brainer. The only decisions required are simple ones like when to buy, when to sell. Easy stuff isn't it? :-)
2. Automatic Diversification. The ETF is automatically invested in the Top 30 Blue Chips. No need for you to actively worry and decide whether you have enough diversification or not, or which stock's fundamentals are deteriorating and thus requires selling, etc., since these decisions are automatically made for you. Linked to 1., you do not need to monitor the fundamentals of the 30 shares!
3. No risk of a single company bust causing the entire fund to go bust. This is linked to 2. above. When a company starts to under-perform, its market cap will diminish, and Bursa will automatically (within prescribed rules) throw that company out and replace it with a new one. So, the chance of FM30ETF going to zero is practically non-existent.
4. Lowest (minimal) fees.
Disadvantage of ETF
Only average market returns, not more. Cannot become like the Top Managers like Ed Seykota, Minnervini or Buffett. However, the performance will be better than the average participant (e.g. in the Top 33% - 50% band), with absolute returns that are marginally below Benchmark Index performance in the long run. For many if not all newbies, they would consider this an advantage (depending on one’s perspective).
2. Automatic Diversification. The ETF is automatically invested in the Top 30 Blue Chips. No need for you to actively worry and decide whether you have enough diversification or not, or which stock's fundamentals are deteriorating and thus requires selling, etc., since these decisions are automatically made for you. Linked to 1., you do not need to monitor the fundamentals of the 30 shares!
3. No risk of a single company bust causing the entire fund to go bust. This is linked to 2. above. When a company starts to under-perform, its market cap will diminish, and Bursa will automatically (within prescribed rules) throw that company out and replace it with a new one. So, the chance of FM30ETF going to zero is practically non-existent.
4. Lowest (minimal) fees.
Disadvantage of ETF
Only average market returns, not more. Cannot become like the Top Managers like Ed Seykota, Minnervini or Buffett. However, the performance will be better than the average participant (e.g. in the Top 33% - 50% band), with absolute returns that are marginally below Benchmark Index performance in the long run. For many if not all newbies, they would consider this an advantage (depending on one’s perspective).
FB30ETF Performance So Far
FB30ETF was introduced in Bursa nearly a year ago, on 19 July 2007. The opening price was $8.68. The highest price was $10, and the lowest price is $7.30.
Yesterday (8 July 2008), the fund closed at $7.35, with a total return to date of -15.3% since inception.
Interestingly, the FB30ETF actually outperformed the KLCI over the same period! See below.
FB30ETF was introduced in Bursa nearly a year ago, on 19 July 2007. The opening price was $8.68. The highest price was $10, and the lowest price is $7.30.
Yesterday (8 July 2008), the fund closed at $7.35, with a total return to date of -15.3% since inception.
Interestingly, the FB30ETF actually outperformed the KLCI over the same period! See below.
Other Thoughts & Observations
Despite the above out-performance, I note with irony that the FB30ETF has not been popular with investors and traders alike this year.
After the excitement in the first few months, volume has declined to very low levels, and is recently only a small fraction of what it used to be during the first few months of IPO.
Perhaps the reason is due to the way the ETF has been marketed. One possibility is that ETF are only appealing to “Do Nothing” investors who just want to obtain “market” returns, by “doing nothing”. Hence Do Nothing = low trading volume.
However, I think this is actually unfortunate.
This is because, I think ETF has the potential to introduce the new trader to learn the skills of trading using Technical Analysis.
In fact, my main purpose in writing this article is not to introduce you to Buy and Hold, but if you are a beginning trader, to stimulate your thoughts further as a Trader.
In fact, I sincerely believe that those who trade this fund only using Technical Analysis actually have an edge over the “Do Nothing” investor, as well as having an edge over FA investors. The "edge" is important, because in the long-run, it will translate to higher returns.
This is because with this fund, it is futile to do a Fundamental Analysis on the Top 30 stocks by market capitalization. No FA investor will bother to do this and then invest in such a fixed diversified fund!
And since this fund is fairly stable in price, and it can never practically go to zero, I personally believe that this is an excellent vehicle for small time and new traders to learn and practice market timing. It is more forgiving if errors are made.
In particular, I believe this is a good vehicle for part-time traders with full-time jobs and a family, and want to focus on their career, besides wanting the opportunity to earn returns higher than Fixed Deposits 3.7% per annum rollover returns.
I believe, with an initial training, one only need to spend less than 5 minutes a day to note the closing price, and if there is an action required, another 5 minutes to place either Buy / Sell order, at the next day’s opening price.
In other words, this is done AFTER market closes. No need to monitor prices during trading hours. No intra-day monitoring is required even on days when actions are required, since Buy and Sell orders are always done at market opens the next day.
Despite the above out-performance, I note with irony that the FB30ETF has not been popular with investors and traders alike this year.
After the excitement in the first few months, volume has declined to very low levels, and is recently only a small fraction of what it used to be during the first few months of IPO.
Perhaps the reason is due to the way the ETF has been marketed. One possibility is that ETF are only appealing to “Do Nothing” investors who just want to obtain “market” returns, by “doing nothing”. Hence Do Nothing = low trading volume.
However, I think this is actually unfortunate.
This is because, I think ETF has the potential to introduce the new trader to learn the skills of trading using Technical Analysis.
In fact, my main purpose in writing this article is not to introduce you to Buy and Hold, but if you are a beginning trader, to stimulate your thoughts further as a Trader.
In fact, I sincerely believe that those who trade this fund only using Technical Analysis actually have an edge over the “Do Nothing” investor, as well as having an edge over FA investors. The "edge" is important, because in the long-run, it will translate to higher returns.
This is because with this fund, it is futile to do a Fundamental Analysis on the Top 30 stocks by market capitalization. No FA investor will bother to do this and then invest in such a fixed diversified fund!
And since this fund is fairly stable in price, and it can never practically go to zero, I personally believe that this is an excellent vehicle for small time and new traders to learn and practice market timing. It is more forgiving if errors are made.
In particular, I believe this is a good vehicle for part-time traders with full-time jobs and a family, and want to focus on their career, besides wanting the opportunity to earn returns higher than Fixed Deposits 3.7% per annum rollover returns.
I believe, with an initial training, one only need to spend less than 5 minutes a day to note the closing price, and if there is an action required, another 5 minutes to place either Buy / Sell order, at the next day’s opening price.
In other words, this is done AFTER market closes. No need to monitor prices during trading hours. No intra-day monitoring is required even on days when actions are required, since Buy and Sell orders are always done at market opens the next day.
(Of course, if you are an experienced trader, you can fine-tune and enhance the method to your own liking).
And what if I tell you that it is possible to achieve returns that significantly outperform the market, by simply trading the FB30ETF and nothing else?
You see, the Buy and Hold investor in FB30ETF since inception managed to obtain a minus 15% return during that (approximately) 12 month period.
What if I tell you that with simple Technical Analysis tools, you could achieve a POSITIVE return, instead of a MINUS 15% return that a Buy and Hold investor achieved over the same period?
Sounds too good to be true isn't it?
You see, the Buy and Hold investor in FB30ETF since inception managed to obtain a minus 15% return during that (approximately) 12 month period.
What if I tell you that with simple Technical Analysis tools, you could achieve a POSITIVE return, instead of a MINUS 15% return that a Buy and Hold investor achieved over the same period?
Sounds too good to be true isn't it?
After all, I'm claiming that through market timing, you can achieve at least +15% outperformance relative to the market!
And this only takes 5 minutes a day after market closes!
And this requires buying/selling when market opens the next day!
And it requires learning about charts and Technical Analysis!
In fact, I know a lot of people will simply not believe it!
In fact, the entire personal financial services industry is full of people who will be against this idea, simply due to vested interest. (Think life insurance agents selling high commissioned investment linked products, or bank salaried/commissioned staff selling higher fee products, mutual funds, unit trusts, etc.). Do not under-estimate the extent of vested interest here, as I was once on their side.
In fact, the mere fact that I mentioned it here means that if I disclose the detailed methodology, I risk a change in future market behaviour, due to vested interest above!
As this article is long enough, I will stop here. Think about it. This is not BS. If you are a long time fundamental investor with little knowledge of Technical Analysis, then, try to see how you can get a POSITIVE return since July 2007, if you had Bought and Hold till today. There's no need to use Technical Indicators, although this can sometimes helps.
I will follow this up with another article later detailing the back-test transactions when I have the willingness and the time to format it in blog format, and when I feel you have done enough of your homework trying to figure this out :-)
Happy thinking :-)
Monday, July 7, 2008
Parkson HK Share Split Approved
I noticed this morning that there was no "live" price for Parkson HK (3368.HK) and yet the HKSE is opened for trading.
Found an announcement to HKSE at 5.30PM last Friday, that at the Special EGM convened, the shareholders have unanimously approved Parkson HK 1-to-5 share split.
As expected, this is not a new information. It was reported in the news last month that Parkson HK was planning the share split here - http://www.tradingmarkets.com/.site/news/Stock%20News/1686299/
"SHANGHAI, Jun 16, 2008 (SinoCast via COMTEX) -- Parkson Retail Group Limited (SEHK: 3368) brews to divide its current HKD 0.1 share to five HKD 0.02 ones with a view to improving the share turnover and enlarge the shareholder base.
Its shares will amount to 7.5 billion after the division, which is scheduled to take effect on July 7, 2008, according to a statement on June 11."
So, it seems we should see new Parkson HK price which is 5 times smaller, with 5 times larger number of shares tomorrow.
UPDATE (10:15AM): I just noticed that Parkson HK is now traded under 2945.HK, not 3368.HK. The share price is now HKD10.x instead of HKD5x.x (i.e. 5 times smaller), and appears to have jumped on opening after the split.
Found an announcement to HKSE at 5.30PM last Friday, that at the Special EGM convened, the shareholders have unanimously approved Parkson HK 1-to-5 share split.
As expected, this is not a new information. It was reported in the news last month that Parkson HK was planning the share split here - http://www.tradingmarkets.com/.site/news/Stock%20News/1686299/
"SHANGHAI, Jun 16, 2008 (SinoCast via COMTEX) -- Parkson Retail Group Limited (SEHK: 3368) brews to divide its current HKD 0.1 share to five HKD 0.02 ones with a view to improving the share turnover and enlarge the shareholder base.
Its shares will amount to 7.5 billion after the division, which is scheduled to take effect on July 7, 2008, according to a statement on June 11."
So, it seems we should see new Parkson HK price which is 5 times smaller, with 5 times larger number of shares tomorrow.
UPDATE (10:15AM): I just noticed that Parkson HK is now traded under 2945.HK, not 3368.HK. The share price is now HKD10.x instead of HKD5x.x (i.e. 5 times smaller), and appears to have jumped on opening after the split.
Sunday, July 6, 2008
The People's Leader: A personal experience
Last night, Pakatan Rakyat held a ceramah perdana at the Expo Seberang Jaya/Permatang Pauh at 9 PM. The venue is basically a "padang" with a platform stage for the guest speakers. Unfortunately, I didn't bring a camera, as the pictures would have spoken a thousand words. So, I will try to share my experiences with you.
Firstly, the event promotion was rather low key. My brother in law who went with me didn't know about it until just 2 days prior. I saw it a few days earlier via a single banner at a junction in Permatang Pauh, confirmed with Internet. A friend was invited last minute. Very low key.
But judging by the attendance, the event was anything but low key. It was jam-packed, like sardines in a tin can! We were there at 8.45 PM and already, I estimated conservatively several thousands of people already.
By 9.30 PM, it was easily over 10,000 people, and possibly 15,000 people. One of the speakers asked if there were 30,000 people and the crowd roared "Ada"!! (although I think this is an exageration). For a lowly promoted event, this was easily one of the largest turnout I have ever seen for this area, far exceeding any expo turnout!
To give you an idea of how packed it is, sitting space was at a premium. We were eventually seated on the grass padang, and our knees were rubbing against another. This is at a padang larger than several football fields.
And if you think this is attended by just Malays, you would be wrong, even though there was a Malay majority there. There were many Chinese and Indian attendees as well, at least more than usual (where "usual" means past Expo attendees).
It is interesting to contrast the attendance with that of the PM who happened to return to Kepala Batas the same day to give out some monetary rewards to the attendees with television coverage. I noted with huge irony that the number of attendees shown on TV was probably fewer than 100! A stark contrast.
The ceramah started at 9 PM, with brief talks by a few of the lesser PR speakers first. Later, a convoy of cars arrived. The atmosphere suddenly changed to become electrified! I knew this means that Anwar together with Penang Chief Minister Lim Guan Eng had arrived. The previously seated and calm crowd suddenly stood up in unison with huge anticipation, trying to get a better view of their leader. The crowd response to Anwar and LGE was simply amazing!
After their arrival and seating with pictures taken by the press, Datin Wan Azizah spoke first and briefly. Before she spoke, I was afraid that her soft-spoken voice might not be able to captivate the crowd as they were still shuffling. I was pleasantly mistaken! She is able to captivate the crowd, temporarily calm them down, deliver a brief, strong and emotional speech when needed, and the crowd was pleasantly surprised by the new Wan Azizah with a strong voice, which I'm sure is the result of her recent Parliamentary experience. The crowd roared when she finished.
LGE spoke next, and I found myself personally amazed at his great delivery in Bahasa. He is not only fluent, colloquial but the Malay majority crowd actually listened to what this guy has to say. He clearly captivated the audience for the full 20-30 minutes. The roar was even louder and came from everyone, regardless of religion or race.
And when it came to Anwar's turn, it was fitting that his was the climatic delivery. Simply stunning and superb. And I can't find the right words to describe it. You just had to be there.
Many times, the audience roared with him and many times, you can hear a pin-drop in the deafening silent atmostphere. Perhaps I am exagerating, since this is my first time listening "live" to Anwar surrounded by tens of thousands of people, but his was the best.
Mind you, it was an open air ceramah in a padang. No free drinks, no free meals, and everyone were either sitting on the grass, road, pavement, and whatever space we could find. And our sole intention being there is to just listen to this great man talking. And the huge crowd of tens of thousands just listened intently. I didn't realize it, but an hour passed just like that.
After he finally finished at 11.20 PM, the crowd roared Reformasi with him, and we started to make our way back. What normally took a minute to walk from where we are to the road turns out taking 35 minutes simply due to the massive crowd! Fortunately, the crowd was orderly throughout, and there was not a single problem that I could see and sense. Thank goodness, we didn't have any FRU problems - in fact, I didn't even see one. Instead, the Traffic Police did their best to direct traffic as smoothly as possible, but the Expo just wasn't designed for so many people, that it was a massive jam in a place never known for traffic jam in all the years I was there.
For a few moments as we made our way out, my thinking mind wondered what might happen if we had a stampede, as the crowd were just so many. To give you an example of how it felt - the night was cool, I felt the cold wind blowing at my ears (since I was taller than the average person there), and yet at the same time, I was sweating below the neck as the crowd was so close with together for nearly half an hour. Interestingly, there was no sense of fear, just calmness as we patiently made our way out.
To me, it is not important to give a blow by blow record of what Anwar spoke. Those who opened their ears and their eyes since March 8 election or prior will readily identify with everything that he has to say. He was simply magical. To me, he didn't speak of anything new that I didn't already know, yet, he makes my understanding clearer that went beyond reading Internet news, listening to his press conference, etc. He was clearly a different Anwar, from the Anwar of the Press Conference.
To say that the crowd was there simply due to the fuel hike is missing the point, although it was a major motivation for everyone there. There is no question many were hugely angered with the fuel hike. Anwar has the charisma, and that night, there was no question in the minds of the attendees there, that it is definitelyAnwar (and not Abdullah) who is the legitimate Prime Minister of Malaysia.
The grass-root support for him was unmistakeably strong that night, even if one is blind. The roar of reformasi was extremely loud and strong. This was in stark contrast to the public support for Abdullah who silently made his way back to Kepala Batas on the same night. It was a tremendous experience that I don't think there is adequate words to describe that night.
Whilst I was deeply touched by the event, I also feel fear for Malaysia. There is no doubt in my mind that for all the attendees there last night, Anwar is their rightful leader. They look to him as their only hope against the present corrupt government who no longer cares about the Rakyat's sufferings, as evidenced by the huge fuel hike and more.
Yet, those in power will not just make way for Anwar peacefully. I pray that everyone will be as safe as they can during this transitionary period, which sadly, I don't know when it will end. But at Seberang Jaya/Permatang Pauh last night, he was definitely the People's Leader.
Take care.
Firstly, the event promotion was rather low key. My brother in law who went with me didn't know about it until just 2 days prior. I saw it a few days earlier via a single banner at a junction in Permatang Pauh, confirmed with Internet. A friend was invited last minute. Very low key.
But judging by the attendance, the event was anything but low key. It was jam-packed, like sardines in a tin can! We were there at 8.45 PM and already, I estimated conservatively several thousands of people already.
By 9.30 PM, it was easily over 10,000 people, and possibly 15,000 people. One of the speakers asked if there were 30,000 people and the crowd roared "Ada"!! (although I think this is an exageration). For a lowly promoted event, this was easily one of the largest turnout I have ever seen for this area, far exceeding any expo turnout!
To give you an idea of how packed it is, sitting space was at a premium. We were eventually seated on the grass padang, and our knees were rubbing against another. This is at a padang larger than several football fields.
And if you think this is attended by just Malays, you would be wrong, even though there was a Malay majority there. There were many Chinese and Indian attendees as well, at least more than usual (where "usual" means past Expo attendees).
It is interesting to contrast the attendance with that of the PM who happened to return to Kepala Batas the same day to give out some monetary rewards to the attendees with television coverage. I noted with huge irony that the number of attendees shown on TV was probably fewer than 100! A stark contrast.
The ceramah started at 9 PM, with brief talks by a few of the lesser PR speakers first. Later, a convoy of cars arrived. The atmosphere suddenly changed to become electrified! I knew this means that Anwar together with Penang Chief Minister Lim Guan Eng had arrived. The previously seated and calm crowd suddenly stood up in unison with huge anticipation, trying to get a better view of their leader. The crowd response to Anwar and LGE was simply amazing!
After their arrival and seating with pictures taken by the press, Datin Wan Azizah spoke first and briefly. Before she spoke, I was afraid that her soft-spoken voice might not be able to captivate the crowd as they were still shuffling. I was pleasantly mistaken! She is able to captivate the crowd, temporarily calm them down, deliver a brief, strong and emotional speech when needed, and the crowd was pleasantly surprised by the new Wan Azizah with a strong voice, which I'm sure is the result of her recent Parliamentary experience. The crowd roared when she finished.
LGE spoke next, and I found myself personally amazed at his great delivery in Bahasa. He is not only fluent, colloquial but the Malay majority crowd actually listened to what this guy has to say. He clearly captivated the audience for the full 20-30 minutes. The roar was even louder and came from everyone, regardless of religion or race.
And when it came to Anwar's turn, it was fitting that his was the climatic delivery. Simply stunning and superb. And I can't find the right words to describe it. You just had to be there.
Many times, the audience roared with him and many times, you can hear a pin-drop in the deafening silent atmostphere. Perhaps I am exagerating, since this is my first time listening "live" to Anwar surrounded by tens of thousands of people, but his was the best.
Mind you, it was an open air ceramah in a padang. No free drinks, no free meals, and everyone were either sitting on the grass, road, pavement, and whatever space we could find. And our sole intention being there is to just listen to this great man talking. And the huge crowd of tens of thousands just listened intently. I didn't realize it, but an hour passed just like that.
After he finally finished at 11.20 PM, the crowd roared Reformasi with him, and we started to make our way back. What normally took a minute to walk from where we are to the road turns out taking 35 minutes simply due to the massive crowd! Fortunately, the crowd was orderly throughout, and there was not a single problem that I could see and sense. Thank goodness, we didn't have any FRU problems - in fact, I didn't even see one. Instead, the Traffic Police did their best to direct traffic as smoothly as possible, but the Expo just wasn't designed for so many people, that it was a massive jam in a place never known for traffic jam in all the years I was there.
For a few moments as we made our way out, my thinking mind wondered what might happen if we had a stampede, as the crowd were just so many. To give you an example of how it felt - the night was cool, I felt the cold wind blowing at my ears (since I was taller than the average person there), and yet at the same time, I was sweating below the neck as the crowd was so close with together for nearly half an hour. Interestingly, there was no sense of fear, just calmness as we patiently made our way out.
To me, it is not important to give a blow by blow record of what Anwar spoke. Those who opened their ears and their eyes since March 8 election or prior will readily identify with everything that he has to say. He was simply magical. To me, he didn't speak of anything new that I didn't already know, yet, he makes my understanding clearer that went beyond reading Internet news, listening to his press conference, etc. He was clearly a different Anwar, from the Anwar of the Press Conference.
To say that the crowd was there simply due to the fuel hike is missing the point, although it was a major motivation for everyone there. There is no question many were hugely angered with the fuel hike. Anwar has the charisma, and that night, there was no question in the minds of the attendees there, that it is definitelyAnwar (and not Abdullah) who is the legitimate Prime Minister of Malaysia.
The grass-root support for him was unmistakeably strong that night, even if one is blind. The roar of reformasi was extremely loud and strong. This was in stark contrast to the public support for Abdullah who silently made his way back to Kepala Batas on the same night. It was a tremendous experience that I don't think there is adequate words to describe that night.
Whilst I was deeply touched by the event, I also feel fear for Malaysia. There is no doubt in my mind that for all the attendees there last night, Anwar is their rightful leader. They look to him as their only hope against the present corrupt government who no longer cares about the Rakyat's sufferings, as evidenced by the huge fuel hike and more.
Yet, those in power will not just make way for Anwar peacefully. I pray that everyone will be as safe as they can during this transitionary period, which sadly, I don't know when it will end. But at Seberang Jaya/Permatang Pauh last night, he was definitely the People's Leader.
Take care.
Saturday, July 5, 2008
SD1 or SD2?
It's now all over the news.
Much has been written about Bala's latest SD2 so, I won't try to write more. Instead, here are some of the links that I found useful in understanding what happened and the bigger picture. I encourage you to look deeper than the superficial, especially the details, the sequence of events, the timing, the press conferences. In other words, imagine that you are the jury, and these are the evidences given to you in a jury trial court. I noticed after the initial black-out, MSM finally improved the speed and extent of their coverage, so the Internet version is useful to compare.
Full SD1
- http://anwaribrahimblog.com/2008/07/03/press-statement-and-statutory-declaration-on-relationship-between-najib-and-altantuya/
Full SD2
- http://rockybru.blogspot.com/2008/07/i-did-1st-july-sd-under-duress-bala.html
- Worthy to mention that in para 3, he retracted para 8, 25, 28, 49-52 ("Najib's paragraph) which specifically refers to Najib (except para 8 which refers to a VIP). In Para 4, he explicitly reverse the statements relating to Najib's paragraph. And in the 2nd last paragraph, he retracted the entire contents of his SD dated 1 July. And this SD is signed 4 July.
PKR's team was shocked, and came out with a press statement here.
- http://anwaribrahimblog.com/2008/07/04/press-alert-press-conference-on-p-balasubramaniam-retracts-staturory-declaration/
Many, many bloggers have analyzed what happened and provided their take there. Some have written more than one article, but I will only link the latest one at the time of writing this article. Below are some of the ones that I find thought provoking. If you have others, please feel free to drop me a comment.
Haris Ibrahim:
http://harismibrahim.wordpress.com/2008/07/04/under-duress-when-he-swore-the-sd-yes-but-when-1st-july-or-4th-july/
Susan Loone:
http://sloone.wordpress.com/2008/07/05/these-photos-will-tell-you-when-bala-was-under-duress/
Malik Imtiaz:
http://malikimtiaz.blogspot.com/2008/07/why-balasubramaniams-first-declaration.html
DAP Lim Kit Siang:
http://blog.limkitsiang.com/2008/07/04/altantuya-najib-link-pi-balasubramaniam-sd1-vs-sd2/
Various bloggers:
http://jelas.info/2008/07/05/bala-on-thursday-bala-on-friday/
http://magickriver.blogspot.com/2008/07/balas-bombshell-press-conference-part.html
Of course, Malaysiakini is an indispensable source. Unfortunately, I still cannot logged into Malaysia Today for several days already.
I'm sure by now, some of you have felt that all this coverage is either stupid, unnecessary, completely fed-up, etc. etc. etc. Here are a couple of links that expresses that - http://rights2write.wordpress.com/2008/07/04/enough-is-enough/, http://niamah.blogspot.com/2008/07/and-now-for-something-completely.html
DSAI of course has indicated that there is more evidence to come. He wants to test the resolve and commitment of the present government to do the right thing. Which means the sad reality is that we most likely can expect these issues to drag on. Leopards don't change their spots overnight. In other words, it won't get better tomorrow. It won't stop tomorrow. And so, it is understandable that some will be impatient and want to see this issue stopped overnight as the longer this drags on, the worst it becomes for Malaysia.
But in our rush to return to the "old stable Malaysia", we must remember the sad but inescapable fact, that despite the huge dissappointment with the Abdullah administration after 2004, at least 50% of Malaysians still and deliberately chose to ACTIVELY voted for BN government to continue on the historic day of March 8, 2008.
Yes, at least 50%.
It was an ACTIVE vote of support, not passive.
To these 50%, they PREFER to see BN government continue, not PR.
They didn't want a change in government.
Else, they would have voted for a change.
These numbers are real, despite the vote rigging accusations. For every 1 million voters, 500,000 did vote for BN.
What does it tell you?
Do you think these 50% are convinced of the need to change?
If not, WHY not?
More importantly, do you think if everyone keeps quiet tomorrow, will this 50% suddenly switch and vote for a change in government in the next election?
Isn't the reverse more likely to happen?
That if we keep quiet, more are likely to swing to BN with greater majority on the next election?
Are we not even more fed-up with the extent of corruption in Malaysia?
Isn't our Judiciary corrupt? Isn't our AG corrupt? Isn't our IGP corrupt? Isn't our Police corrupt? Aren't our MPs corrupt? Isn't our Military Intelligence corrupt? Isn't our MSM controlled and biased? etc.
Is the situation improving?
Or is it getting worse?
And if it's getting worse, how can we be quiet?
Some will say that corruptions happen everywhere, so, what's new?
If it happens everywhere, does it make it right?
Ironically, the strongest force in the universe is not love nor hate. It is apathy and indifference.
"Indifference is the strongest force in the universe. It makes everything it touches meaningless. Love and hate don't stand a chance against it. " -- Joan Vinge
Some urged DSAI to stop playing politics and quickly produce evidence so that there is a quick "justice to Altantuya". But is this issue just about one VVIP lying? Or is this issue much bigger than just a single MP?
Haris shared an open letter to DSAI which prompted me to write this article here - http://harismibrahim.wordpress.com/2008/07/05/an-open-letter-to-anwar-ibrahim/
The author of the open letter asked for quick justice for Altantuya.
And I will end this article by asking for justice for ALL MALAYSIANS.
Show the world your true feelings this Sunday. March peacefully. As you are there, always remember that a peaceful march must be your first priority. Remember the only message that you need to send to the entire world is your presence this Sunday, notwithstanding all the intimidations that you will get. Don't be a hero. Never provoke and never retaliate. Violence is never the answer. But the message must be sent. Action speaks louder than words. Being there is the loudest action that you can shout to the government. Let's pray for the safety of everyone.
Remember, "People should not fear the government. It is the government who should fear the People". - Haris (http://harismibrahim.wordpress.com/2008/07/04/people-should-not-fear-their-government-the-government-should-fear-the-people/)
Much has been written about Bala's latest SD2 so, I won't try to write more. Instead, here are some of the links that I found useful in understanding what happened and the bigger picture. I encourage you to look deeper than the superficial, especially the details, the sequence of events, the timing, the press conferences. In other words, imagine that you are the jury, and these are the evidences given to you in a jury trial court. I noticed after the initial black-out, MSM finally improved the speed and extent of their coverage, so the Internet version is useful to compare.
Full SD1
- http://anwaribrahimblog.com/2008/07/03/press-statement-and-statutory-declaration-on-relationship-between-najib-and-altantuya/
Full SD2
- http://rockybru.blogspot.com/2008/07/i-did-1st-july-sd-under-duress-bala.html
- Worthy to mention that in para 3, he retracted para 8, 25, 28, 49-52 ("Najib's paragraph) which specifically refers to Najib (except para 8 which refers to a VIP). In Para 4, he explicitly reverse the statements relating to Najib's paragraph. And in the 2nd last paragraph, he retracted the entire contents of his SD dated 1 July. And this SD is signed 4 July.
PKR's team was shocked, and came out with a press statement here.
- http://anwaribrahimblog.com/2008/07/04/press-alert-press-conference-on-p-balasubramaniam-retracts-staturory-declaration/
Many, many bloggers have analyzed what happened and provided their take there. Some have written more than one article, but I will only link the latest one at the time of writing this article. Below are some of the ones that I find thought provoking. If you have others, please feel free to drop me a comment.
Haris Ibrahim:
http://harismibrahim.wordpress.com/2008/07/04/under-duress-when-he-swore-the-sd-yes-but-when-1st-july-or-4th-july/
Susan Loone:
http://sloone.wordpress.com/2008/07/05/these-photos-will-tell-you-when-bala-was-under-duress/
Malik Imtiaz:
http://malikimtiaz.blogspot.com/2008/07/why-balasubramaniams-first-declaration.html
DAP Lim Kit Siang:
http://blog.limkitsiang.com/2008/07/04/altantuya-najib-link-pi-balasubramaniam-sd1-vs-sd2/
Various bloggers:
http://jelas.info/2008/07/05/bala-on-thursday-bala-on-friday/
http://magickriver.blogspot.com/2008/07/balas-bombshell-press-conference-part.html
Of course, Malaysiakini is an indispensable source. Unfortunately, I still cannot logged into Malaysia Today for several days already.
I'm sure by now, some of you have felt that all this coverage is either stupid, unnecessary, completely fed-up, etc. etc. etc. Here are a couple of links that expresses that - http://rights2write.wordpress.com/2008/07/04/enough-is-enough/, http://niamah.blogspot.com/2008/07/and-now-for-something-completely.html
DSAI of course has indicated that there is more evidence to come. He wants to test the resolve and commitment of the present government to do the right thing. Which means the sad reality is that we most likely can expect these issues to drag on. Leopards don't change their spots overnight. In other words, it won't get better tomorrow. It won't stop tomorrow. And so, it is understandable that some will be impatient and want to see this issue stopped overnight as the longer this drags on, the worst it becomes for Malaysia.
But in our rush to return to the "old stable Malaysia", we must remember the sad but inescapable fact, that despite the huge dissappointment with the Abdullah administration after 2004, at least 50% of Malaysians still and deliberately chose to ACTIVELY voted for BN government to continue on the historic day of March 8, 2008.
Yes, at least 50%.
It was an ACTIVE vote of support, not passive.
To these 50%, they PREFER to see BN government continue, not PR.
They didn't want a change in government.
Else, they would have voted for a change.
These numbers are real, despite the vote rigging accusations. For every 1 million voters, 500,000 did vote for BN.
What does it tell you?
Do you think these 50% are convinced of the need to change?
If not, WHY not?
More importantly, do you think if everyone keeps quiet tomorrow, will this 50% suddenly switch and vote for a change in government in the next election?
Isn't the reverse more likely to happen?
That if we keep quiet, more are likely to swing to BN with greater majority on the next election?
Are we not even more fed-up with the extent of corruption in Malaysia?
Isn't our Judiciary corrupt? Isn't our AG corrupt? Isn't our IGP corrupt? Isn't our Police corrupt? Aren't our MPs corrupt? Isn't our Military Intelligence corrupt? Isn't our MSM controlled and biased? etc.
Is the situation improving?
Or is it getting worse?
And if it's getting worse, how can we be quiet?
Some will say that corruptions happen everywhere, so, what's new?
If it happens everywhere, does it make it right?
Ironically, the strongest force in the universe is not love nor hate. It is apathy and indifference.
"Indifference is the strongest force in the universe. It makes everything it touches meaningless. Love and hate don't stand a chance against it. " -- Joan Vinge
"First they came for the Jews. I was silent. I was not a Jew.
Then they came for the Communists. I was silent. I was not a Communist.
Then they came for the trade unionists. I was silent. I was not a trade unionist.
Then they came for me. There was no one left to speak for me."
-- Martin Miemoller
Some urged DSAI to stop playing politics and quickly produce evidence so that there is a quick "justice to Altantuya". But is this issue just about one VVIP lying? Or is this issue much bigger than just a single MP?
Haris shared an open letter to DSAI which prompted me to write this article here - http://harismibrahim.wordpress.com/2008/07/05/an-open-letter-to-anwar-ibrahim/
The author of the open letter asked for quick justice for Altantuya.
And I will end this article by asking for justice for ALL MALAYSIANS.
Show the world your true feelings this Sunday. March peacefully. As you are there, always remember that a peaceful march must be your first priority. Remember the only message that you need to send to the entire world is your presence this Sunday, notwithstanding all the intimidations that you will get. Don't be a hero. Never provoke and never retaliate. Violence is never the answer. But the message must be sent. Action speaks louder than words. Being there is the loudest action that you can shout to the government. Let's pray for the safety of everyone.
Remember, "People should not fear the government. It is the government who should fear the People". - Haris (http://harismibrahim.wordpress.com/2008/07/04/people-should-not-fear-their-government-the-government-should-fear-the-people/)
Friday, July 4, 2008
PARKSON Observations
At lunch time, Parkson HK closed at HKD50. This is very close to its key support level at HKD 49.45. The stock is currently trading below its 200 day EMA for over 6 weeks now - the longer it trades below this, I believe the harder it will be to recover.
Interestingly, PARKSON KL has broken its key support $5 much earlier. The low for today is $4.24. It appears that Parkson local expects Parkson HK to break its support.
From a Sum of Parts valuation, Parkson HK at HKD50 is worth $5.58. This assumes a NIL value for Parkson Vietnam and NIL value for Parkson Malaysia. At 20% discount, it is worth 80% x 5.58 = $4.46.
I must say I am deeply amazed at how Parkson KL price fell faster and ahead of Parkson HK price. It is as if the traders in KL markets knew what Parkson HK will do next. Of course, this is a small sample, since my observation is based on recent fall, and perhaps it can also be explained by other factors as well.
Parkson HK is now at a critical level. If the support breaks, we could see more falls ahead. On the other hand, if in the less likely event that it recovers, the buy at $4.24 this morning might turn out to be very cheap indeed.
To me, this market is more suited to a trader with a successful sell stop discipline, than an investor, due to the high level of uncertainty surrounding Parkson HK's future prospects over the rest of this year and quite possibly the next year.
Thursday, July 3, 2008
DSAI's bombshell - Balasubramaniam's Statutory Declaration
Today has been an incredible and unbelievable day! Yes, I was shocked too by the news and what happened to Bursa. Who isn't?
Ok. Bursa first. (Bear in mind I'm writing this at 4.30 pm, and have no plans to update this article.)
At 9 AM, we were surprised to discover that Bursa was shut down for trading, apparently for the morning session only. Then, we were to find out that it is also going to be shut down for the afternoon session also. And then, we were surprised to hear that it could be reopen at 3.30 PM. There was a brief trading session, but then, it was halted again!
In my opinion, this is extremely unprofessional for at least 2 major reasons. First, the widespread expectation that there should have been a back-up system kicking in when the primary system didn't work. Think Disaster Recovery situations when a company like Bursa is expected to be up and running even if disasters - natural or man-made - occurs.
Second, to allow trading temporarily at 3.30 PM and then to halt a few minutes later is ridiculous! I understand Bursa is calling for a press conference to explain.
But this is a relatively minor matter, compared to what DSAI disclosed this morning at a press conference at 11.30 AM.
I want to document a few things here on a bombshell for future reference.
Malaysian Insider News
First, when I checked before 9 AM, the Malaysian Insider did mention that DSAI will call a press conference at 11.30 AM, but gave a different reason which did not mention Altantuya and Najib link. Unfortunately, I don't have a screenshot of the reason mentioned. The next time, I will take a screenshot. (Update: They have atoned themselves and now has a better coverage than MSM).
Kudos to Haris Ibrahim Blog
Whereas Haris Ibrahim's blog did, and at a much earlier time too. (http://harismibrahim.wordpress.com/2008/07/03/news-that-will-rock-the-nation/). "I am reliably informed that at 11.00 30 am this morning, Anwar Ibrahim will hold a press conference at PKR’s spanking new HQ at Merchant Square, Tropicana to reveal evidence linking Najib to Altantuya."
Naturally, I was very dissappointed with the Malaysian Insider for giving a different reason for the press conference since being an online newspaper, I had hoped that it would paint the truth, the whole truth and nothing but the truth.
Mass Media Coverage
I have harped before about how biased the MSM reporting is and this episode is no exception.http://fusioninvestor.blogspot.com/2008/06/msm-blackout-on-rpks-bombshell.html
The Mass Media coverage is again extremely dissappointing.
Again, at the time of writing (4.30 PM - at least 5 hours after DSAI's press conference), none of the MSM painted a clear picture of what the SD and DSAI's press conference is all about.
The only MSM that alluded to something was The Star, but the quality of reporting is extremely poor relative to the Internet. I am referring only to the English and Bahasa language MSM.
You may check this yourself, although as time passes, things will change. At 4.30 PM, I checked the following links and found no reference to DSAI's bombshell.
- http://www.nst.com.my/
- http://thestar.com.my/news/story.asp?file=/2008/7/3/nation/20080703123900&sec=nation (this has a 3 paragraph statement, a picture of Balasubramaniam, and a statement that says "More to follow" - I will comment later).
- http://www.bharian.com.my/Current_News/BH/Seksyen/indexberita_html?mysec=Mutakhir
- http://www.utusan.com.my/
- http://www.sun2surf.com/
- http://www.theedgedaily.com/cms/index.jsp
I am also dissappointed with The Edge. Being a business newspaper, I had expected it to alert its readers about a very material piece of news that will have a material market impact.
As for The Star.
Whilst it is good to see that it tries to report it, it naturally fails to mention the name of the politician involved. So, you still lose the sense of "importance".
The Internet
And sadly, we must continue to rely on the Internet for "the truth, the whole truth and nothing but the truth" about what DSAI actually said to the press and what the SD content is all about!
Ironic isn't it?
That when a press conference is called, MSM blacks it out?
Anyway, the full link of DSAI's press statement and a copy of the SD here - http://anwaribrahimblog.com/2008/07/03/press-statement-and-statutory-declaration-on-relationship-between-najib-and-altantuya/
Balasubramaniam's Statutory Declaration
For me, it's important to read the entire SD, but a few paragraphs deserves mention. I will repeat the facts below, so that readers have a full appreciation of what is being written in the SD, and can form their own informed opinion. As you read this, remember that the DPM has said repeatedly to the press and to MSM that he was never acquainted with Altantuya.
Paragraph 25
25. During this discussion and in an attempt to persuade me to continue my employment with him, Abdul Razak Baginda informed me that :-
25.1 He had been introduced to Aminah by Datuk Seri Najib Tun Razak at a diamond exhibition in Singapore.
25.2 Datuk Seri Najib Tun Razak informed Abdul Razak Baginda that he had a sexual relationship with Aminah and that she was susceptible to anal intercourse.
25.3 Datuk Seri Najib Tun Razak wanted Abdul Razak Baginda to look after Aminah as he did not want her to harass him since he was now the Deputy Prime Minister.
25.4 Datuk Seri Najib Tun Razak, Abdul Razak Baginda and Aminah had all been together at a dinner in Paris.
25.5 Aminah wanted money from him as she felt she was entitled to a USD$500,000.00 commission on a submarine deal she assisted with in Paris.
Paragraph 28
28. Whist I was talking to Aminah, she informed me of the following :-
28.1 That she met Abdul Razak Baginda in Singapore with Datuk Seri Najib Tun Razak.
28.2 That she had also met Abdul Razak Baginda and Datuk Seri Najib Tun Razak at a dinner in Paris.
28.3 That she was promised a sum of USD$500,000.00 as commission for assisting in a Submarine deal in Paris.
28.4 That Abdul Razak Baginda had bought her a house in Mongolia but her brother had refinanced it and she needed money to redeem it.
28.5 That her mother was ill and she needed money to pay for her treatment.
28.6That Abdul Razak Baginda had married her in Korea as her mother is Korean whilst her father was a Mongolian/Chinese mix.
28.7 That if I wouldn’t allow her to see Abdul Razak Baginda, would I be able to arrange for her to see Datuk Seri Najib Tun Razak.
Paragraphs 48 to 52
48. I was transported to Bukit Aman where I was interrogated and questioned about an SMS I had received from Abdul Razak Baginda on the 19.10.2006 which read “delay her until my man arrives”. They had apparently retrieved this message from Abdul Razak Baginda’s handphone.
49. They then proceeded to record my statement from 8.30 a.m. to 6.00 p.m. everyday for 7 consecutive days. I told them all I knew including everything Abdul Razak Baginda and Aminah had told me about their relationships with Datuk Seri Najib Tun Razak but when I came to sign my statement, these details had been left out.
50. I have given evidence in the trial of Azilah, Sirul and Abdul Razak Baginda at the Shah Alam High Court. The prosecutor did not ask me any questions in respect of Aminah’s relationship with Datuk Seri Najib Tun Razak or of the phone call I received from DSP Musa Safri, whom I believe was the ADC for Datuk Seri Najib Razak and/or his wife.
51. On the day Abdul Razak Baginda was arrested, I was with him at his lawyers office at 6.30 a.m. Abdul Razak Baginda informed us that he had sent Datuk Seri Najib Tun Razak an SMS the evening before as he refused to believe he was to be arrested, but had not received a response.
52. Shortly thereafter, at about 7.30 a.m., Abdul Razak Baginda received an SMS from Datuk Seri Najib Tun Razak and showed, this message to both myself and his lawyer. This message read as follows :- ” I am seeing IGP at 11.00 a.m. today …… matter will be solved … be cool”.
Amazingly mind boggling isn't it?
So, what are the implications from this latest Bombshell?
Will DPM continue to deny his acquaintance / relationship with Altantuya?
How will the public and markets react to this news? If there is a denial, how will they react to the denial?
Is this just the DPM, the IGP, the AG, the Prosecutor Team we are talking about or much bigger than the 4 of them?
Paragraph 28 refers to something Bala spoke to Aminah, and Aminah (Altantuya) is no longer around to confirm the conversation. Paragraph 25 refers to Razak, and so far, Razak is still alive and in theory should be able to either confirm or deny. And both Bala and DSAI are of course still alive and in theory are able to provide more elaboration if necessary. Will we continue to have "stability", or is it now obvious that the participants on both sides have clearly crossed the line a long time ago and there is no looking back?
What about newsflow? Is this the last bad news to come out? Or will there be more newsflow in the future? Has the tone of the political chess game came down? Or will it continue to escallate and become much worse?
Do you find yourself "hoping" that things will improve? Do you find yourself "justifying" that since it has already fallen so low, how much more can I lose? Many highly intelligent people has tried to predict bottoms and failed miserably. Do I think I have superior intelligence than the smartest people on earth to be able to predict a bottom accurately?
Be safe.
Ok. Bursa first. (Bear in mind I'm writing this at 4.30 pm, and have no plans to update this article.)
At 9 AM, we were surprised to discover that Bursa was shut down for trading, apparently for the morning session only. Then, we were to find out that it is also going to be shut down for the afternoon session also. And then, we were surprised to hear that it could be reopen at 3.30 PM. There was a brief trading session, but then, it was halted again!
In my opinion, this is extremely unprofessional for at least 2 major reasons. First, the widespread expectation that there should have been a back-up system kicking in when the primary system didn't work. Think Disaster Recovery situations when a company like Bursa is expected to be up and running even if disasters - natural or man-made - occurs.
Second, to allow trading temporarily at 3.30 PM and then to halt a few minutes later is ridiculous! I understand Bursa is calling for a press conference to explain.
But this is a relatively minor matter, compared to what DSAI disclosed this morning at a press conference at 11.30 AM.
I want to document a few things here on a bombshell for future reference.
Malaysian Insider News
First, when I checked before 9 AM, the Malaysian Insider did mention that DSAI will call a press conference at 11.30 AM, but gave a different reason which did not mention Altantuya and Najib link. Unfortunately, I don't have a screenshot of the reason mentioned. The next time, I will take a screenshot. (Update: They have atoned themselves and now has a better coverage than MSM).
Kudos to Haris Ibrahim Blog
Whereas Haris Ibrahim's blog did, and at a much earlier time too. (http://harismibrahim.wordpress.com/2008/07/03/news-that-will-rock-the-nation/). "I am reliably informed that at 11.00 30 am this morning, Anwar Ibrahim will hold a press conference at PKR’s spanking new HQ at Merchant Square, Tropicana to reveal evidence linking Najib to Altantuya."
Naturally, I was very dissappointed with the Malaysian Insider for giving a different reason for the press conference since being an online newspaper, I had hoped that it would paint the truth, the whole truth and nothing but the truth.
Mass Media Coverage
I have harped before about how biased the MSM reporting is and this episode is no exception.http://fusioninvestor.blogspot.com/2008/06/msm-blackout-on-rpks-bombshell.html
The Mass Media coverage is again extremely dissappointing.
Again, at the time of writing (4.30 PM - at least 5 hours after DSAI's press conference), none of the MSM painted a clear picture of what the SD and DSAI's press conference is all about.
The only MSM that alluded to something was The Star, but the quality of reporting is extremely poor relative to the Internet. I am referring only to the English and Bahasa language MSM.
You may check this yourself, although as time passes, things will change. At 4.30 PM, I checked the following links and found no reference to DSAI's bombshell.
- http://www.nst.com.my/
- http://thestar.com.my/news/story.asp?file=/2008/7/3/nation/20080703123900&sec=nation (this has a 3 paragraph statement, a picture of Balasubramaniam, and a statement that says "More to follow" - I will comment later).
- http://www.bharian.com.my/Current_News/BH/Seksyen/indexberita_html?mysec=Mutakhir
- http://www.utusan.com.my/
- http://www.sun2surf.com/
- http://www.theedgedaily.com/cms/index.jsp
I am also dissappointed with The Edge. Being a business newspaper, I had expected it to alert its readers about a very material piece of news that will have a material market impact.
As for The Star.
Whilst it is good to see that it tries to report it, it naturally fails to mention the name of the politician involved. So, you still lose the sense of "importance".
The Internet
And sadly, we must continue to rely on the Internet for "the truth, the whole truth and nothing but the truth" about what DSAI actually said to the press and what the SD content is all about!
Ironic isn't it?
That when a press conference is called, MSM blacks it out?
Anyway, the full link of DSAI's press statement and a copy of the SD here - http://anwaribrahimblog.com/2008/07/03/press-statement-and-statutory-declaration-on-relationship-between-najib-and-altantuya/
Balasubramaniam's Statutory Declaration
For me, it's important to read the entire SD, but a few paragraphs deserves mention. I will repeat the facts below, so that readers have a full appreciation of what is being written in the SD, and can form their own informed opinion. As you read this, remember that the DPM has said repeatedly to the press and to MSM that he was never acquainted with Altantuya.
Paragraph 25
25. During this discussion and in an attempt to persuade me to continue my employment with him, Abdul Razak Baginda informed me that :-
25.1 He had been introduced to Aminah by Datuk Seri Najib Tun Razak at a diamond exhibition in Singapore.
25.2 Datuk Seri Najib Tun Razak informed Abdul Razak Baginda that he had a sexual relationship with Aminah and that she was susceptible to anal intercourse.
25.3 Datuk Seri Najib Tun Razak wanted Abdul Razak Baginda to look after Aminah as he did not want her to harass him since he was now the Deputy Prime Minister.
25.4 Datuk Seri Najib Tun Razak, Abdul Razak Baginda and Aminah had all been together at a dinner in Paris.
25.5 Aminah wanted money from him as she felt she was entitled to a USD$500,000.00 commission on a submarine deal she assisted with in Paris.
Paragraph 28
28. Whist I was talking to Aminah, she informed me of the following :-
28.1 That she met Abdul Razak Baginda in Singapore with Datuk Seri Najib Tun Razak.
28.2 That she had also met Abdul Razak Baginda and Datuk Seri Najib Tun Razak at a dinner in Paris.
28.3 That she was promised a sum of USD$500,000.00 as commission for assisting in a Submarine deal in Paris.
28.4 That Abdul Razak Baginda had bought her a house in Mongolia but her brother had refinanced it and she needed money to redeem it.
28.5 That her mother was ill and she needed money to pay for her treatment.
28.6That Abdul Razak Baginda had married her in Korea as her mother is Korean whilst her father was a Mongolian/Chinese mix.
28.7 That if I wouldn’t allow her to see Abdul Razak Baginda, would I be able to arrange for her to see Datuk Seri Najib Tun Razak.
Paragraphs 48 to 52
48. I was transported to Bukit Aman where I was interrogated and questioned about an SMS I had received from Abdul Razak Baginda on the 19.10.2006 which read “delay her until my man arrives”. They had apparently retrieved this message from Abdul Razak Baginda’s handphone.
49. They then proceeded to record my statement from 8.30 a.m. to 6.00 p.m. everyday for 7 consecutive days. I told them all I knew including everything Abdul Razak Baginda and Aminah had told me about their relationships with Datuk Seri Najib Tun Razak but when I came to sign my statement, these details had been left out.
50. I have given evidence in the trial of Azilah, Sirul and Abdul Razak Baginda at the Shah Alam High Court. The prosecutor did not ask me any questions in respect of Aminah’s relationship with Datuk Seri Najib Tun Razak or of the phone call I received from DSP Musa Safri, whom I believe was the ADC for Datuk Seri Najib Razak and/or his wife.
51. On the day Abdul Razak Baginda was arrested, I was with him at his lawyers office at 6.30 a.m. Abdul Razak Baginda informed us that he had sent Datuk Seri Najib Tun Razak an SMS the evening before as he refused to believe he was to be arrested, but had not received a response.
52. Shortly thereafter, at about 7.30 a.m., Abdul Razak Baginda received an SMS from Datuk Seri Najib Tun Razak and showed, this message to both myself and his lawyer. This message read as follows :- ” I am seeing IGP at 11.00 a.m. today …… matter will be solved … be cool”.
Amazingly mind boggling isn't it?
So, what are the implications from this latest Bombshell?
Will DPM continue to deny his acquaintance / relationship with Altantuya?
How will the public and markets react to this news? If there is a denial, how will they react to the denial?
Is this just the DPM, the IGP, the AG, the Prosecutor Team we are talking about or much bigger than the 4 of them?
Paragraph 28 refers to something Bala spoke to Aminah, and Aminah (Altantuya) is no longer around to confirm the conversation. Paragraph 25 refers to Razak, and so far, Razak is still alive and in theory should be able to either confirm or deny. And both Bala and DSAI are of course still alive and in theory are able to provide more elaboration if necessary. Will we continue to have "stability", or is it now obvious that the participants on both sides have clearly crossed the line a long time ago and there is no looking back?
What about newsflow? Is this the last bad news to come out? Or will there be more newsflow in the future? Has the tone of the political chess game came down? Or will it continue to escallate and become much worse?
Do you find yourself "hoping" that things will improve? Do you find yourself "justifying" that since it has already fallen so low, how much more can I lose? Many highly intelligent people has tried to predict bottoms and failed miserably. Do I think I have superior intelligence than the smartest people on earth to be able to predict a bottom accurately?
Be safe.
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