Life's crossroads

There are many defining moments in one's life and the decisions which one makes at that point in life will affect him or her for the rest of your lives. For example, which course to study at university, which job to take on after graduation, which guy or gal to marry, whether to have kids after marriage, should i take up the overseas posting, should i change my job, should i trade full time for a living..... etc.

Everyday, we are faced with decisions that will have an impact on our lives (like what to eat, where to eat) but on some days, the decisions will have a greater impact on our lives than others and i call them life defining decisions.

It was funny that in February i started my own fund management firm but in March, a global firm headhunted me back into the corporate world again. I found the global platform irresistable as it manages billions of dollars across various funds as as private equity, infrastructure, real estate, distress, etc and my little adventure to be my own boss came to a pre-mature end.

I am not one who shy away from making decisions and i firmly believe that each decision which i make will chart a new chapter in my life. And here I am again, charting a new chapter in my life and climbing the corporate ladder once again. The only difference is that i am there because i want to and hopefully, not to run the rat race again.

China Energy Update

Further to my post on 12 March 2008, China Energy has dropped from 61.5 cents to 35.5 cents! A whopping 42% in market cap was wiped off from China Energy and the shareholders must be really angry and frustrated. :(

Never catch a falling knife...China Energy

When i first started out trading the stock market, i always look for stocks that has corrected severely. I thought i am getting 'value for money'. But somehow after buying the stock, the stock price continue to drop and the company because more and more "valuable" until my short term investment became a long term one. After paying lots of school fees and reading tons of books on trading, I avoid such stocks altogether. That is the reason why i share with you one important lesson, the trend is your friend.

China Energy is one such stock which i will avoid buying unless i am shorting it. I have no idea why the stock price is so weak but my advice to you will be not to catch a falling knife until you see potential signs of reversal...(and you die die have to buy this stock).

Out of Midas

Midas opened at 96 and went all the way to 98 before profit taking sets in. I put in a trailing stop at 95.5 cents after 9 am and was taken out at 95 cents when the price came down. A trailing stop is useful when I want to let my stock runs and maximize my trade but under such volatile trading conditions, it is always difficult to decide if you want the trailing stop to be close by or further away or to take the profit while Sun is out (it is raining heavily now at my office...)

Midas Touch

Midas used to be a favourite of many until it lost that 'midas touch' a few weeks back. Today is one of the rare occassion that i bought a stock after many months of staying 'in cash'. I bought Midas this morning at 85 cents after it formed a doji yesterday and announced a JV contract that is worth S$300m. I guessed I managed to get in at this price due to the poor showing by US overnight. The oversold stochastic and increased in volume seemed to bode well for a technical rebound back to the S$1 level. Since the overall trend is still downwards, this trade will be a for quickie only.

SINGAPORE: Midas Holdings has secured a S$300 million deal to supply 32 metro train sets, an equivalent of 192 train carriages, for the Shanghai Metro Line 2 Eastern Extension Project. The orders are expected to be fulfilled between 2009 and 2010. Midas ' joint venture firm, Nanjing SR Puzhen Rail Transport (NPRT), will have an estimated two-thirds share of the contract. This is the second contract won this year by Midas , which manufactures aluminium alloy extrusion products. - (Source: Channel News Asia).

Malaysia Stock Market Crash

Further to my posting yesterday, the KLCI triggerred the limit down 'circuit breaker' for the first time since it was introduced during the Asian Financial Crisis. Now that 1,200 level support has been breached, the next target will be the support at 1,100.

A New Era for Opposition in Malaysia?

BN sufferred its biggest loss in years where it lost 5 states. It is particularly humbling for the incumbent PM Abdullah who lost the state of Pulau Penang where he was born. Will the political unstability has an adverse impact on Malaysia? Looking at the KLSE, it looks like it is ready to tumble down towards the 1,200 support and if that breaks, it will look pretty bad for the investors.

People's Food Holdings Limited

People's Food Holdings reported a net EPS of 8.53 cents and gross dividend of 2.63 cents for the year ended 31 Dec 2007. At 109 cents, this imply a PE of 12.8x and yield of 2.4%. From the chart, People's Food appears to be bottoming out as long as it does not break the 95 cents support again. Amid the volatile and weak market, this is one of the more 'stronger-looking' stock around and i guess investors still like companies that pays annual dividend. A possible target will be 120-130 region if the 95 cents support holds.

The Trend Is Your Friend

(FS STI chart)

The Trend Is Your Friend. If there is anything of value which i can share with you, this will be one of it. Always respect the underlying trend in the overall market. This is one of the longest correction which the market (STI) has experienced (from early Nov to end Feb) 4 months and it is still counting. The previous corrections are in August 07 (one month), March 07 (one month), May 06 (2 months). It seemed like the overall market has already embarked on a downtrend. When the market trend is down (where all the moving averages are pointing and sloping downwards), the trading strategies will be to either short the market using futures, warrants, CFDs or Share borrowing, or to play quickies on the long side nimbly.

If there is another lesson which i can share with you, it will be to cut your losses quickly, especially when you have the advantage of being a small trader. If you are not in the league of Oei Hong Leong, then my suggestion is you cut your losses quickly when you are wrong. Investors like Mr. Oei really have my respect. He is really one of the best market timers around. I remember Mr. Oei getting out of his positions way back in 2007 when the market picture is still rather rosy. He has to do that early because he holds huge positions and need to get out while the market is bullish and liquid. I still have his article advising people to sell stocks and hold cash tightly lying somewhere around...