1. I was half-right (half-wrong). Bailout was approved. Market did not crash. But surprisingly, the market was in the red. Well, I'm not smart enough to understand the whole economic bulls***. Maybe people are beginning to realise that this bailout is going to be ineffective after all.
2. I find it funny that how come Paulson is the main guy pushing for all these things and Ben Bernanke is taking a backseat from all these. I see Paulson speaking more than Ben Bernanke, in fact I see President Bush speaking more than Ben Bernanke. Don't you find this funny? The studious and great researcher of the great depression, Ben Bernanke, is not speaking much. Let me tells a story.
Disclaimer: This story is fictitious. It does not depict any real life story or any real person. Any similarity between characters or stories in the real world is purely coincidental. (Hope, this will cover my backside)
Scene 99: Ed's Meeting Room
Characters : Paul Bear's son
Uncle BB
Mr. Z (he is not a friend of Mr. X, mind you)
The meeting begins...
Mr. Z: Alright, we all know the truth, I think... So how are we going to save this piece of s***? Come on Uncle BB, you have the most profound knowledge of great economic crisis in history. Say something and do something!!!
Uncle BB: You want the truth or lie?
Mr. Z: Truth please.
Uncle BB: We can't do anything for nuts. Letting them go bankrupt is inevitable and probably the only way.
Mr. Z: Are you serious?
Paul Bear's son: Lieeeeeeeeeesssssssssssssssssssssssssssss.......... Honestly we can do something.
Uncle BB: There is nothing we can do. Credit expansion had a long history all the way back since world war II. There is no way we can salvage the situation.
Paul Bear's son: Since the financial system will collapse eventually, why not try something. Maybe it will work. It has worked for 60 years. I mean, who knows. If you don't want to do it, leave it to me man.
Mr. Z: Paul Bear's son, are you sure you have a plan?
Paul Bear's son: Well, Uncle BB doesn't have one.
Uncle BB: I'm sick and tired of this. Do whatever you want.
To Be Continued.....
Well, if you get what I'm trying to say, then it is very good. I shall not be too explicit over here.
3. For the first time, I have seen someone raised the word "Deflation". Surprisingly, gold is down, oil is down, stocks are down. I still have a weak case for gold in times of deflation. Anyway, deflation is a freaking long process so maybe some economists will start to enlighten us soon.
Market Stand
Short, sell, hold cash. You know me. Until we see some panic in the market, I don't think we have seen the bottom. Again, I wish to witness a stock market crash. By the way, the ban on short selling will be over on the 8 Oct. Maybe, just maybe, we will really see a black friday.
I got wiped out personally in 1968, which was the last really crazy, silly stock market before the Internet era….After 1968, I became a great reader of history books. I was shocked and horrified to discover that I had just learned a lesson that was freely available all the way back to the South Sea Bubble.
Jeremy Grantham
Monday, October 6, 2008
Thursday, October 2, 2008
Mid Week Pit Stop #23
Well, lets talk a bit about the market. I feel that looking at the market now, learning from it, is a very good experience after all, most people have not really been through a true bear market (me too). As always, my stand is clear. Short this whole market.
Short Selling
Let's talk about about short selling. I really like this article - "Long on Stupidity, Short on Common Sense".
The title is so... true (you can revise the title and say that to me actually =D). Seriously speaking, those people just don't really that short sellers have to be in the market. Most people will say that they punish prices, distort the facts, the values and so on. But they don't realise one thing. Usually it is the short sellers who bring in the rally. It is not the "value investors" that are soley at work when it comes to rallying. Short sellers play a huge part in rallies as well.
I remember watching cnbc on tues and someone was saying that banning short selling is good and the SEC should move on to ban buying oil. OMG. What the hell is that person talking on cnbc, earning big bucks for saying something as stupid as that? He was arguing that oil prices are too high because of pure speculation and manipulation and a lot more (actually I never really listen but I was turned off by his first sentence).
Banning short selling is as good as saying banning long term buying. It just doesn't work out. As much as I am on the short side, wanting the market to plunge, I don't agree with banning long term buying as well (if the SEC does comtemplate this, that is). For goodness sake, what are those people thinking. I like the example used on China.
Whenever some "smart" people out there who think that they should do something and indeed try something new, there will be disastrous effect. Just look what happened to oil and gold in history. It is proven.
The Bailout
Well, it also applies to the bailout. I like Jim Rogers in this video here. There is one more on bloomberg but it is similar. Again, he enlightens me a lot with Korea and Russia this time round. Again, the classic example will be Japan.
I don't remember putting this graph up. Anyway, to illustrate Jim Rogers view, Japan peaked at 39000 in late 1989 and took 13 yearS to bottom at 8000 in 2003!!! (YES, 13 years of bear market, don't go about and say there is some mini bulls in between)
5 years down the road, the market is only at 11000 and is no where near half of where it was.
Yes, Japan bails out lots of zombie companies back then. If you are a long term investor and you cheer for the bail out. Think about it.
Do think through what I say.
Last Words: I think the house will not pass the bill. Black Friday? =)
Short Selling
Let's talk about about short selling. I really like this article - "Long on Stupidity, Short on Common Sense".
The title is so... true (you can revise the title and say that to me actually =D). Seriously speaking, those people just don't really that short sellers have to be in the market. Most people will say that they punish prices, distort the facts, the values and so on. But they don't realise one thing. Usually it is the short sellers who bring in the rally. It is not the "value investors" that are soley at work when it comes to rallying. Short sellers play a huge part in rallies as well.
I remember watching cnbc on tues and someone was saying that banning short selling is good and the SEC should move on to ban buying oil. OMG. What the hell is that person talking on cnbc, earning big bucks for saying something as stupid as that? He was arguing that oil prices are too high because of pure speculation and manipulation and a lot more (actually I never really listen but I was turned off by his first sentence).
Banning short selling is as good as saying banning long term buying. It just doesn't work out. As much as I am on the short side, wanting the market to plunge, I don't agree with banning long term buying as well (if the SEC does comtemplate this, that is). For goodness sake, what are those people thinking. I like the example used on China.
Whenever some "smart" people out there who think that they should do something and indeed try something new, there will be disastrous effect. Just look what happened to oil and gold in history. It is proven.
The Bailout
Well, it also applies to the bailout. I like Jim Rogers in this video here. There is one more on bloomberg but it is similar. Again, he enlightens me a lot with Korea and Russia this time round. Again, the classic example will be Japan.
I don't remember putting this graph up. Anyway, to illustrate Jim Rogers view, Japan peaked at 39000 in late 1989 and took 13 yearS to bottom at 8000 in 2003!!! (YES, 13 years of bear market, don't go about and say there is some mini bulls in between)
5 years down the road, the market is only at 11000 and is no where near half of where it was.
Yes, Japan bails out lots of zombie companies back then. If you are a long term investor and you cheer for the bail out. Think about it.
Do think through what I say.
Last Words: I think the house will not pass the bill. Black Friday? =)
Sunday, September 28, 2008
No Black Monday (I guess)
Actually, I'm just waiting for some of the latest updates on the bailout news. Well, I saw plenty of doom articles saying that if the bailout is not set, we will probably see black monday and bloody tuesday. Jim Cramer even suggests that Dow could go as low as 8000.
Bailout News
As of 2314Hrs singapore time (GMT +0800?), I think the bailout is going to be successful. So... I need to rethink a bit.
Dollar
I think the dollar is a tricky issue. Is a bailout good on the dollar?
1. If you look from a confidence point of view, maybe bailout brings back confidence and people start buying dollar.
2. If you look from money printing point of view, dollar has to go down.
Again, we should just sit tight, probably ignore the market for some time. Take a nap elsewhere, come back and see that the dollar is now at 1:1 against Singapore dollar. =)
Stock Market Crash
Honestly speaking, I really think that the only way to the bottom is a crash. Somehow someway, I believe that it is coming.
1. It is a type of panic selling.
2. Unjustified short selling ban will create some sort of bubble. (short term)
3. I don't see a bottom yet and bankruptcies are coming fast.
4. I guess I'm just a natural bear who want to get a market crash correct. Self-fulfilling? Possibly actually.
5. Maybe it is also because I have some put warrants on hand!!!
Some Rules
Rule no.1: Time Stop - If I'm not wrong, the short selling ban will be over on 2nd Oct? I will see how it goes on 3rd Oct then. Probably a time stop on 3rd Oct.
Rule no.2: Price Stop - Dow 8000 for simplicity sake.
Rule no.3: Hmm... follow 1 and 2. What a cliche rule, but it works somehow.
Let's see if I have improved from a year ago or am I back to square one
Latest Update
Cool, a pure gut feel thing. Bailout wasn't accepted and we had a sellout. 700 points on Dow. My adrenaline was rushing when I saw -700 on dow in that split second. Again I emphasize that this is not the bottom so please, don't go into the market thinking that it is cheap now. If you will listen to me, sell all you have. It is easy for me to say, but why are you stuck in current situation in the first place... Have you thought through that? Somehow, my rules aren't applicable anymore. LOL things change fast. I will be holding my puts
Hardwork is approximately linear to reward
Our very genius, Mr. X
Bailout News
As of 2314Hrs singapore time (GMT +0800?), I think the bailout is going to be successful. So... I need to rethink a bit.
Dollar
I think the dollar is a tricky issue. Is a bailout good on the dollar?
1. If you look from a confidence point of view, maybe bailout brings back confidence and people start buying dollar.
2. If you look from money printing point of view, dollar has to go down.
Again, we should just sit tight, probably ignore the market for some time. Take a nap elsewhere, come back and see that the dollar is now at 1:1 against Singapore dollar. =)
Stock Market Crash
Honestly speaking, I really think that the only way to the bottom is a crash. Somehow someway, I believe that it is coming.
1. It is a type of panic selling.
2. Unjustified short selling ban will create some sort of bubble. (short term)
3. I don't see a bottom yet and bankruptcies are coming fast.
4. I guess I'm just a natural bear who want to get a market crash correct. Self-fulfilling? Possibly actually.
5. Maybe it is also because I have some put warrants on hand!!!
Some Rules
Rule no.1: Time Stop - If I'm not wrong, the short selling ban will be over on 2nd Oct? I will see how it goes on 3rd Oct then. Probably a time stop on 3rd Oct.
Rule no.2: Price Stop - Dow 8000 for simplicity sake.
Rule no.3: Hmm... follow 1 and 2. What a cliche rule, but it works somehow.
Let's see if I have improved from a year ago or am I back to square one
Latest Update
Cool, a pure gut feel thing. Bailout wasn't accepted and we had a sellout. 700 points on Dow. My adrenaline was rushing when I saw -700 on dow in that split second. Again I emphasize that this is not the bottom so please, don't go into the market thinking that it is cheap now. If you will listen to me, sell all you have. It is easy for me to say, but why are you stuck in current situation in the first place... Have you thought through that? Somehow, my rules aren't applicable anymore. LOL things change fast. I will be holding my puts
Hardwork is approximately linear to reward
Our very genius, Mr. X
Thursday, September 25, 2008
Mid Week Pit Stop #22
I have some trouble trying to persuade one of my research team mates to convert the rating on keppel corp to a sell. I have some trouble trying to tell people to short the whole world (the market). Lastly, I have some trouble trying to advocate my thoughts that one day, everyone will hate stocks for a long period of time.
I actually talk to Mr. X's father about the 2nd great depression thoughts and he mentions a very important word that I have always ignored - diversification. Honestly, diversification doesn't run in my blood. You can say don't put all your eggs in one basket but I will tell you to put all your eggs in one basket and watch the basket. The word never has any impact on me until I begin to face those troubles.
It is very difficult for people to take my stand of extreme bearishness to some extent. I will not be shorting and keeping the shorts forever anyway (the world is against shorters, they will think of new plans). I realise that emphasing a stock market doom is not very applicable for most people. I begin to think about the word diversification and it leads to one smart man - Jim Rogers. Needless to say, there can only be one word to relate to him and that is "Commodities"!
Another Asset Class - Commodities
Somehow, nobody likes to go into commodities because it is perceived to be risky. After all, the only way to purchase pure commodities is through futures. You can go down to some shops and buy gold bars though.
There are few reasons why I like commodities:
1. Personally, this is the main reason - money has to go somewhere. This sounds very fuzzy and lack of substance. But it makes a lot of sense isn't it. Though demand and supply should be the main way to comment on commodities, but I like to be fuzzy at times.
2. Jesse Livermore actually earns bulk of his initial fortunes with cotton.
3. As risky as it sounds, the gains are awesome. Yeah, you hear stories of people losing their shirts with futures but... ... Alright, it is risky if you don't know it well.
4. Honestly speaking, I'm super new to commodities. Humans love novelty. It is not men who love novelty only.
5. Just like Indices, I think commodities are really much simpler than stocks itself.
Why Commodities Will Be The Next Big Thing?
1. Actually it has, in history, come to spotlight many times.
2. Stock market doom... I have emphasized this enough.
3. You can see it coming isn't it? Lots of commodities funds are sprouting out. More news coverage and so on.
4. You have a very out-spoken guru that speaks the very truth and people will listen.
Like what Jim Rogers said, "Enron was a natural gas company but it went to zero. " There are also many examples that you can find in his books about lousy oil stocks during the oil spike.
The thing is this.
What's the point of worrying about whether the profit margin of a company will improve or not with higher oil prices in the future when you can simply buy oil if you see strong demand for oil in the long run.
Last Words
I urge you to be opened to a new asset class that most people tend to avoid. Now it is still not too late. Gold can go much higher, oil can go much higher. I will read up more on commodities on my part as well. Nonethless, start reading what Jim Rogers has to say about commodities. It is going to make you a better investor in the future. Thank you
You can no longer buy commodities at Merrill Lynch. My guess is many analysts and even executives are too young to know how profitable a hot commodities market can be. They will soon.
Jim Rogers
Friday, September 19, 2008
Desperate Times Calls For Desperate Measures
Interestingly, Buffett doesn't buy a bank stock with his recent purchase. Hmm...... need me to explain more?
Also if you want to know the whole story of what has happened recently. I can't explain that well so it's best that I try to find something that explain it properly. Read this.
Desperate Times Desperate Measures
Well, honestly speaking, I still don't see any panic selling for the week. Those are really true selling in my opinion. Of course, many people want to blame "shorters" again, maybe this world has something wrong with short people. Why not blame "buyers" who pushes the price up so far in the first place. Seriously speaking, this isn't right.
But anyone who knows the truth, knows that everything is just a facade.
This week is amazing indeed.
1. We are very close to flat for the week.
2. We have a short selling ban. I mean... if that's what it takes to stop the selling and drag the problem. So be it. I probably earn less money. That's all.
3. Gold was good. Up close to 13%.
4. I sold half of my put positions, when China was flat on wednesday afternoon. HSI was still down some 500 points I think (off lows of 1200 points).
I Am Not So Smart (my views)
1. Well, if you buy the story that the worst is over, its safe to buy stocks now, blah blah blah, think about it. A rally created by banning short sellers, how creative can the officials get? If the prices are falling so badly, why not close down wall street for a few days, a week or even more. Why not let banks take a break and go for some holiday? This is insane isn't it. Not because the rally eats into some of my profits but it is not beneficial at all in the long run. This is not even a panic selling.
2. I have this funny feeling.
If you actually read back some of my previous post, this chart has become a classic. When I look back at what has happened this week and this chart, I have this funny idea. Honestly speaking, I really don't wish to hold my shorts for so long but I feel that I have to re-think about that situation. The bankruptcy is coming too fast for me to understand the whole situation. Luckily, they ban short selling for 10 days so in a way we will not see any selling for at least 10 days. It has given me some time to think through some stuffs. Maybe, we will really remember 2008 as the Bank crisis year.
3. Actually point no.2 never really mentions about the chart. I think the big one is upon us. I find it funny that nothing was mentioned about citigroup and jp morgan. Also, I just realise that AIG derivatives holding is just 60billion. That's 0.1% of the total amount of OTC derivatives held in the world. Let's hope the rest of the 99.9% is safe. I'm sure.
4. Did I mention much about the chart? Alright, I think the bottom is way much lower than I have previously thought. Since bankruptcies have already taken place, I believe there is more to go and I really believe that JP morgan is the last bomb. The bank that holds the most amount of OTC derivatives. If I am not wrong, they hold 90 trillion notional value of OTC.
DO NOTE THAT THE NUMBERS ARE IN TRILLIONS (notional value)
5. Buy Gold. Please, gold is cheap now. I really can't emphasize this anymore, if you want to keep some money and earn some money, please go to the nearest gold shop, buy some gold bars and keep at home. Alright, you can buy some ETFs also or futures on gold.
6. I'm probably going to find some ways to hold some shorts for 1 year or so.
7. I'm not so smart, so do read thru properly.
"The truth isn't what you want to see"
Toh Chin Sheng =)
Also if you want to know the whole story of what has happened recently. I can't explain that well so it's best that I try to find something that explain it properly. Read this.
Desperate Times Desperate Measures
Well, honestly speaking, I still don't see any panic selling for the week. Those are really true selling in my opinion. Of course, many people want to blame "shorters" again, maybe this world has something wrong with short people. Why not blame "buyers" who pushes the price up so far in the first place. Seriously speaking, this isn't right.
But anyone who knows the truth, knows that everything is just a facade.
This week is amazing indeed.
1. We are very close to flat for the week.
2. We have a short selling ban. I mean... if that's what it takes to stop the selling and drag the problem. So be it. I probably earn less money. That's all.
3. Gold was good. Up close to 13%.
4. I sold half of my put positions, when China was flat on wednesday afternoon. HSI was still down some 500 points I think (off lows of 1200 points).
I Am Not So Smart (my views)
1. Well, if you buy the story that the worst is over, its safe to buy stocks now, blah blah blah, think about it. A rally created by banning short sellers, how creative can the officials get? If the prices are falling so badly, why not close down wall street for a few days, a week or even more. Why not let banks take a break and go for some holiday? This is insane isn't it. Not because the rally eats into some of my profits but it is not beneficial at all in the long run. This is not even a panic selling.
2. I have this funny feeling.
If you actually read back some of my previous post, this chart has become a classic. When I look back at what has happened this week and this chart, I have this funny idea. Honestly speaking, I really don't wish to hold my shorts for so long but I feel that I have to re-think about that situation. The bankruptcy is coming too fast for me to understand the whole situation. Luckily, they ban short selling for 10 days so in a way we will not see any selling for at least 10 days. It has given me some time to think through some stuffs. Maybe, we will really remember 2008 as the Bank crisis year.
3. Actually point no.2 never really mentions about the chart. I think the big one is upon us. I find it funny that nothing was mentioned about citigroup and jp morgan. Also, I just realise that AIG derivatives holding is just 60billion. That's 0.1% of the total amount of OTC derivatives held in the world. Let's hope the rest of the 99.9% is safe. I'm sure.
4. Did I mention much about the chart? Alright, I think the bottom is way much lower than I have previously thought. Since bankruptcies have already taken place, I believe there is more to go and I really believe that JP morgan is the last bomb. The bank that holds the most amount of OTC derivatives. If I am not wrong, they hold 90 trillion notional value of OTC.
DO NOTE THAT THE NUMBERS ARE IN TRILLIONS (notional value)
5. Buy Gold. Please, gold is cheap now. I really can't emphasize this anymore, if you want to keep some money and earn some money, please go to the nearest gold shop, buy some gold bars and keep at home. Alright, you can buy some ETFs also or futures on gold.
6. I'm probably going to find some ways to hold some shorts for 1 year or so.
7. I'm not so smart, so do read thru properly.
"The truth isn't what you want to see"
Toh Chin Sheng =)
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