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Dec 2012 Stock Market Comment : The Great Bear…. Corrections in Market…

{9 Comments}

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ear Investors,

Since the 2008-2009 Global Financial Crises, our KLSE market has recover from a low ground @ 800 way past our historical to finally register a new record high @ 1679, on end-Oct 2012. The market has seen many correction and booming. With its correction, the market eventually move higher. Since the KLSE market recovers from its low, we have four major corrections (for our market, defined -4% in the index), see table below.

Given the circumstance, financial market in Malaysia has fared very well, KLSE has 4 majors corrections , greater than -4% drop, averaging around -10%. This is much better than sample of investors’ portfolio that we talked about – losing more than -30% in a year for some.

 

SGX  Corrections

Across the Causeway, our SGX market has fared much worst than Malaysia, the SGX market has been very volatile marred by higher exposure to foreign hedge funds, China stocks and regional fund flows. On the flip side, the SGX REITs did very well. This yielding REIT sector averages 5-7% dividend yield with combined YTD return +20-30%. Not bad for those investors seeking yield return. Click here for more report on SGX REITs.

Notice the chart above, each correction SGX has, it has been more than -10%. It was a tough market but investors are rewarded for holding high quality stocks like F&N SGX, ComfortDelgro,  and yield rich REITs like Capitacommercial Trust & Ascendas REIT

[quote style="1"] We strongly believe SGX REITs that focus on retail and office will benefit if Singapore economic condition continues to grow and create jobs![/quote]

Bottomline for SGX & KLSE

[pullquote align="right"]The bear market forecast for KLSE ie. fall off cliff situation, couple with the post-math of GE-13, we are looking for -9-11% drop in KLSE indices till 1470-1500 level and SGX market may also plummet to 2400-2500 level.[/pullquote]. With the impending hot issue like the US Fiscal Cliff with a sweeping tax hikes and spending cuts taking effect in Jan 2013, it is possible that US economy may slide into a recession bring the rest of the world into slowdown.

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Japan may be the next good investment after my visit to Japan

Holiday is always good and what else is more fun with your children to Tokyo DisneySea and Land for 3 full days. Click here for my personal blog on my visit.

Here is a picture of the Imperial Palace tour visit.

(Here is a picture of me with Amy of Search (popular rock singer in Malaysia), Amy took his family also to Tokyo Disneyland. ).

Like any father, Amy too, loves holidaying with his children like me. He recommend me to go to Hokkaido, Japan next time to see the beautiful lavender flowers blooming. I love flowers. Remember my posting for tulips, Keukenhof, Netherland

Many investors in Malaysia and Singapore avoid overseas investment like they avoid bad smelling food like Durian (Mao San Wong) . However, looking at the evidence presented and my personal ground experience in Japan, Japan stock market may have bottom up. Good Durians always bring the fragrant out, would you agree ?

Look at the chart below.

The market has formed a double bottom support with SOS (notice the lows of each bar) and beginning to mark up to Stage 2.

Here’s the postive points for their market:

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  • Bad news for Japan on the spats between Chinese and the demands for Japanese goods e.g. cars on the East China Sea island.
  • Strong Japanese Yen
  • Global fund mgrs has been so negative for Japanese stock market that they have little exposure here. (Remember the contrarian investor always do – yes, the opposite !)
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In the short term, Japan is relatively cheap in term of evaluation and chartwise, it presents a good trade. Whether the catalyst that persuades markets to recognise this comes tomorrow or in a year’s time is by-the-by.”

In the monthly checklist (premium section), I will show you how you can exposure to Nikkei market via our my company ie online trading account. Contact me if you wish to open overseas trading account in Malaysia.

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What’s the difference between investors who make money consistently and those who don’t?

In my work and daily dealing with investors, our research also concur with Dalbar research findings in US that there are differences on these two group of investors. What are we talking about ?

The educated investors, of course. Educated investors are the group uses fundamental stock screener like our TradersTruthRevealed Magic Scanner – A fundamental stock selector for KLSE & SGX will benefits. Click here for Magic Scanner Details.

Both types of investors may do extensive research into the stocks they buy. Both may be able to quote the P/E ratios, 200-day moving averages, profit margins and every other numbers about the stocks they own.

And both types of investors often choose great companies to buy. But the first group does something differently. It’s a key advantage that separates the winners from the average investors every time:

This group of doesn’t get emotional. In fact, it is this unwillingness to be swayed by emotion that has been proven to be the single biggest factor separating investors who beat the market from those who did badly, year after year.

Successful investors don’t just hold during periods of volatility, they also buy at the right price.

Right now, we are doing a survey amongst graduates and premium subscribers of TradersTruthrevealed about their portfolio performance 2012. The results have been encouraging with more of them making decent return for this year during our quick survey in Friday Chart Clinic webinar. Also See Poll Table at the bottom !

Congratulations to our graduates and Premium Subscribers !

Update on Gold

Regular readers should know that we are a big believer of gold and silver in your portfolio. We even wrote a booklet on Gold and held several gold convention in the pasts. Gold certainly hold a big position in our clients portfolio and ourselves too.

It is our belief that with the continuing administration of US President Obama and its sidekick US Fed Chairman, B.Bernanke, paper currency like Euro & US will lose its value against gold gradually.

 

Look at the chart above.

Gold holdings by emerging and developing economies has increased by 40-50% since 2007. Yet, their share of gold holdings in total official reserves remains at just 15% compared to a share of almost 58% in the G-7 plus others countries.

The central bank of these emerging economies’ like China, Korea, Thailand and Malaysia will increase their share of gold holdings substantial especially at these current prices.

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Here is the premium section. {+}

1. Let’s review our last month Nov 2012 case study – CBIP. It had done very well despite huge selloff in the palm oil prices.

The stock is still hanging just below its Rm2.70 market entry price. A good fundamental stock which is taking a beating from the lower palm oil prices.

The stock for case study for Dec 2012 is Aliran Ehsan Berhad. Click here for more details. A water utility and the 3rd largest supplier of treated water to BN state like Johor, Perak. This stock will do well after the election and shud BN win with majority.

My Magic Scanner is telling me than Aliran has 4-5% dividend yield with ROE of 12% and Profit Margin > 30%.

Check out the Magic Scanner yourself.

You have 3 free months of trial of Magic Scanner. The login id and password are emailed to you in batches. Please be patient as my worker are working on it.

The chartwise is good with steady accumulation at RM1.74-RM1.76


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2. Last month Nov 2012 Stock Market comment case study of Ara Asset has hold its position and test new high @ $1.65. This REIT is a Cheung Kong Group, a big property in Hong Kong has its asset spread all over Asia. The “spring” was a test of strength that the market cud not go lower.

The Dec 2012 Stock Market Comment case study is VICOM, (click here for details) an auto retail stores that provide motor vehicle inspections for all taxis and buses and is majority owned by ComfortDelgro, so they are getting huge bulk of the biz from ComfortDelGro. They have an investment moat in Singapore in the auto retail inspection.

Look at the current earnings and rev table. It pay a 3-4% dividend yield and has PE of 15-16x. It has no debt and profit margin above 30%.

 

Chartwise, look to accumulate @ $4.60 level.

[divider top="1"] 3. The overseas ETF country that we were talking earlier at the top is Japanese Country fund called EWJ.


Look to buy on the breakout @ USD9.45

4. Another country fund is Hong Kong Financial Market. To play on Hong Kong, you can use EWH rather than investing on individual stock. EWH is at all time and optimism is very high. Look to buy on pullback.

Accumulate @ USD18.00

5. Look to accumulate gold and silver under weakness as we are talking currently in the early month of Dec 2012.

Have a good holiday season and see you next year in Jan 2013.
-Martin-

9 Comments…

 Share your views
  1. Hi Martin,

    Do you trade FCPO and KLCI index futures?

  2. Two of my uncles are interested in taking a course by a professional who specializes in Malaysian futures market. Can you analyze them on day to day basis? So I can show them your analysis.

  3. Pua,

    Why dont you learn how to trade futures using VSA from our main course and you teach them how to look at the chart.

    If they are not using price and volume in futures, it is likely that they wud have difficult succeeding in a long run.

    I have seen so many people use the incorrect tools to trade.

    Good luck to your uncles.

    -Martin-

  4. Good idea. I will consider to take it. Two years ago, they learnt what being taught by David Weis. I told them why don’t attend a course organized by Malaysians. We have VSA experts as well like you and Bill. After having a brief browse to your website, they are very interested. But they asked if you do the analysis on day to day basis. That’s why I passed over the question.

  5. Pua,

    Bottom line is if they dont have time to analyse the market then they are not suited to trade futures. that my opinion.

    You got me full time professional trader (market maker) who is ready to take their “money” away.

    Good luck to you.

    -Martin-

  6. They are owners of estates. All jobs are handled by workers. They only work few hours a week. I will let you know if they are interested. :)

  7. Get their money invested with fund managers. They shud preserve and grow their wealth NOT trading. I am not saying that they shud buy unit trust. Go to people who has a track record and can be trusted.

    That’s an idea for you.

    -Martin-

  8. Thanks so much for the idea. I will have a chat with them.

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