Nikkei 1995 vs Nikkei 2011 - updates

Congrats to those who waited patiently and shorted around 10000 level.. nice level to enter.. on the way down down down .... See previous post

Into the killing zone: Silver (update)

Okie.. the BBs have thrown in the towel.. looks pretty much like a dead cat bounce.. now that the big fishes had unloaded their positions.. downside selling pressure is pretty much on the table in the near future... Downtrend line established. First target level 30.00.

Into the killing zone: Silver

This chap finally got seriously injured but not dead yet.. A massive selldown from almost 50 bucks to 33 bucks in a week !!! The massive shakeout has taken out most weak holders.. and now it has rebounded so the Big Fishes are most likely scooping up again.. looks like there is a chance that old high or should I say 50 bucks will be taken out in time to come...

Misguided and futile exercise = Market Manipulation???

May 3, 2011 

WHENEVER large share offerings like last month's Hutchison Port Holdings Trust (HPHT) and Mapletree Commercial Trust (MCT) are floated, it is routine to see 'stabilisation managers' appointed to support prices just after listing. Similarly, when stock prices plunge, an inevitable clamour is raised for regulators to intervene via 'circuit breakers' to maintain and support the market.
In both cases, despite the obvious connotations of manipulation and the impression of a false market given, most observers have been led to believe that circuit breakers and stabilisation activities are acceptable because, when properly regulated, they can be beneficial to the financial market.
According to conventional wisdom, this artificial containment of volatility is desirable because it facilitates placements, promotes investor confidence, and encourages investment and capital raising. There's an odd logic at work here which essentially is that, although manipulation is frowned upon, controlled manipulation is OK if it serves a greater good. But does it really?
Silent risks
In their excellent article titled The Black Swan of Cairo, in the May/June issue of Foreign Affairs, writers Nassim Taleb and Mark Blyth argue that suppressing volatility makes the world less predictable and more dangerous.
'Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate below the surface,' wrote Messrs Taleb and Blyth.
'Although the stated intention of political leaders and economic policymakers is to stabilise the system by inhibiting fluctuations, the result tends to be the opposite. These artificially constrained systems become prone to 'Black Swans' - that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.'
The writers conclude that it is both misguided and dangerous to push unobserved risks further into the tails of the probability distribution of outcomes and to allow these high-impact, low-probability 'tail risks' to disappear from policymakers' field of observation.
Although the study was mainly about the current turmoil in the Arab world, the same arguments apply to financial markets, which are just as complex as the political arena. The message isn't difficult to understand: try and keep a lid on things or stifle the market's natural tendencies, and you might succeed for a while; but eventually there's a price to be paid, which may be very painful (as many Arab regimes have discovered these past few months).
In the case of Wall Street, complacency and groupthink among regulators that theirs was the best policed market in the world led to a largely unnoticed buildup of risks in the housing sector, which in turn enabled the investment banks to pull off the sub-prime scams they did.
On a smaller but no less relevant scale is the adoption of price stabilisation for new listings. If the market is happy with the price and is comfortable with the company's prospects, the price will rise no matter what the efforts of the stabilisation manager; conversely, if the stock isn't popular or its prospects deemed to be less than stellar, the price will fall regardless of artificial, officially-sanctioned support.
Such has been the case with last month's mega-IPO HPHT, which was offered at US$1.01 and whose post-listing saw its stabilisation manager buy a total of 540 million shares between April 5 and 12 at prices ranging from US$0.975 to US$1.01. After April 12, after the manager stopped buying, the counter has not performed. The stock closed at US$0.92 last Friday.
Circuit breakers
Similarly, MCT's managers were active last week buying at the offer price of 88 cents. So far, that level is still holding (barely) but it remains to be seen if MCT goes the same way as HPHT - and if the efforts to stabilise price movements turn out to be yet another exercise in futility.
As for circuit breakers, our thoughts were already detailed in this column last week ('Does the SGX really need circuit breakers?', Hock Lock Siew, BT, April 25); suffice to say that, given the lack of evidence so far, it's hard to be convinced there really are benefits in halting trading during times of high turbulence.
The fundamental problem is that when it comes to complex systems like the stock market, trying to curb its natural behaviour by treating it in a linear domain leads to complacency, the buildup of larger-than-foreseen risks and, eventually, larger-than-necessary mistakes.
Markets would be far better off doing away with artificial controls that seek to suppress volatility or bias prices towards the upside, while protecting the downside, since these controls simply delay the inevitable.

Purpose Driven Life

A very good article.. IMHO. I thought I will post it up as a constant reminder to myself.

23 Apr 2011 Figuring out the purpose of life To find happiness in our careers, we must know how to allocate our time, energy and talent A RECENT edition of Harvard Business Review carried an article, 'How Will You Measure Your Life?', written by Harvard Business School (HBS) professor Clay Christensen. Prof Christensen's class is structured to help his students understand what good management theory is and how it is built. To that backbone, he attaches different models or theories that help students think about the various dimensions from which a general manager can stimulate innovation and growth. In each session, they look at one company through the lenses of these theories - using them to explain how the company got into its situation and to examine what managerial actions will yield the needed results. On the last day of the class, he asks his students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I'll be happy in my career. Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I'll stay out of jail? 'Though the last question sounds light-hearted, it's not,' said Prof Christensen. 'Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys - but something in their lives sent them off in the wrong direction.' One of the theories, he said, that gives great insight on the first question - how to be sure we find happiness in our careers - is from Frederick Herzberg, who asserts that the powerful motivator in our lives isn't money. It's the opportunity to learn, to grow in responsibilities, contribute to others, and be recognised for achievements. Prof Christensen told his students about his vision of sorts while he was running the company he founded before becoming an academic. 'In my mind's eye, I saw one of my managers leave for work one morning with a relatively strong level of self-esteem. Then I pictured her driving home to her family 10 hours later, feeling unappreciated, frustrated, underutilised, and demeaned. I imagine how profoundly her lowered self-esteem affected the way she interacted with her children. 'The vision in my mind then fast-forwarded to another day, when she drove home with greater self-esteem - feeling that she had learned a lot, been recognised for achieving valuable things, and played a significant role in the success of some important initiatives. I then imagined how positively that affected her as a spouse and parent. 'My conclusion: Management is the most noble of professions if it is practised well. No other occupation offers as many ways to others to learn and grow, take responsibility and be recognised for achievement, and contribute to the success of a team. 'More and more MBA students come to school thinking that a career in business means buying, selling, and investing in companies. That's unfortunate. Doing deals doesn't yield the deep rewards that come from building up people,' he said. Create a strategy for your life As for the second question - how can I ensure that my relationship with my family proves to be an enduring source of happiness - Prof Christensen said that just like in a company, it depends on how masterfully we allocate our resources. So if a company steers its investments to initiatives that offer the most tangible and immediate returns, they shortchange investments in initiatives that are crucial to their long-term strategies. Over the years, he said he'd watched the fates of his HBS classmates from 1979 unfold. More and more of them come to reunions unhappy, divorced, and alienated from their children. 'I can guarantee you that not a single one of them graduated with the deliberate strategy of getting divorced and raising children who would become estranged from them. And yet a shocking number of them implemented that strategy? 'The reason? They didn't keep the purpose of their lives front and centre as they decided how to spend their time, talents and energy.' Having a clear purpose in life is essential. Prof Christensen recounted that when he was a Rhodes scholar, the academic programme was very demanding. But he decided to spend an hour every night reading, thinking, and praying about why he was on this earth. It was a challenging commitment, because every hour spent doing that could have been used to study applied econometrics. But he stuck with it, and ultimately figured out the purpose of his life. 'Had I instead spent that hour each day learning the latest techniques for mastering the problems of autocorrelation in regression analysis, I would have badly misspent my life. I apply the tools of econometrics a few times a year, but I apply my knowledge of the purpose of my life every day. It's the single most useful thing I've ever learned.' He promises his students that figuring out their purpose in life would be the most important thing they discovered at HBS. His purpose grew out of his religious faith. But faith isn't the only thing that gives people direction. One of his former students decided that his purpose was to bring honesty and economic prosperity to his country, and to raise children who were as capably committed to this cause, and to each other, as he was. After deciding on one's purpose in life, the next question is how to allocate one's personal time, energy and talent. 'People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers - even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.' If you study the root causes of business disasters, over and over you'll find this predisposition towards endeavours that offer immediate gratification. If you look at personal lives through that lens, you'll see the same stunning and sobering pattern; people allocate fewer and fewer resources to the things they would have once said mattered most, said Prof Christensen. 'Marginal costs' mistakes Finally, the answer to question three is to avoid the 'marginal costs' mistakes. Unconsciously, we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong. A voice in our head says: 'Look, I know that as a general rule, most people shouldn't do this. But in this particular extenuating circumstance, just this once, it's ok.' The marginal cost of doing something wrong 'just this once' always seems alluringly low, said Prof Christensen. It suckers you in, and you don't ever look at where that path ultimately is headed and at the full costs that the choice entails. 'Justification for infidelity and dishonesty in all their manifestations lies in the marginal cost economics of 'just this once'.' Timely reminders, indeed.

Into the killing zone: Silver

This fellow is going as strong as ever.. after the correction which brings it to 33's level. Seems like the bull is still raging.. Surely, it is going to meet some resistance at the upper band channel but as long as oil prices are firm and the middle-east situations status quo or worsen, there is no reason to see it tumbling down anytime soon. There is definitely a bubble in the metal commodities.. still waiting patiently for the TOP..

Tencent ... the Chinese internet Giant ..

This fellow has finished its retracement to 38.2% fibo and nicely resuming its uptrend within a channel. If the bull continues, next target will be 300 bucks.. climbing its way up to the ranks of Baidu or even Google.

GBPJPY Bottom out for Mega Swing trade??? - Part 3

Busy busy busy with work.. manage to squeeze in a bit of time to update the trade on this pair which is panning out well nicely.. See previous post

Nikkei 1995 vs Nikkei 2011 - updates

Nicely coming down.. for those who are waiting to short.. See previous post

Singapore the Switzerland of Asia ???

A matter of common sense MIT's Franco Modigliani Professor of Financial Economics Stephen A Ross gives his take on understanding the 2008 financial crisis. By Genevieve Cua PROFESSOR and finance professional Stephen A Ross has little patience for the blame game that ensues when the topic of the 2008 financial crisis comes up. In conversations, presentations and articles, brickbats are typically hurled at investment bankers, rating agencies and Wall Street in general who collectively 'fleeced the unwary'. But Prof Ross is having none of that. 'I'm getting tired of talking about the crisis. It's extremely frustrating because there are all the things I think I should know about but I don't . . . There is all the talk about how Wall Street fleeced the unwary. This is a complete misunderstanding of how financial markets work. Markets are there to protect the innocent. Competition is the best protection for the innocent, but nothing protects the innocent from themselves.' Prof Ross is widely recognised for having pioneered the agency theory and for seminal work on models to price derivatives. Both areas of research are arguably germane to understanding the crisis. The agency theory, in particular, looks into the ubiquitous relationship between principals and agents - as, for instance, between a company and its employees - and hot-button issues such as executive compensation and conflict of interest. At a recent talk in Singapore organised by the Centre for Asset Management Research & Investments (Camri), he tells his audience of a city manager who invested heavily in mortgage backed securities which subsequently bombed. '(The manager) said, 'I didn't understand the product; the investment banker told me to buy.' I don't care where you're from. Do you think the investment banker is an angel from God who walks into your door? You have a world where you can get 5 per cent from a government security and someone walks in saying 'I can give you 7 per cent risk-free', and you buy it. 'You can't plead innocent after the fact; that's nonsense. You are the one that's greedy. You thought you could get something for free. The following is true: If it's too good to be true then it's not true. The only way to get more return is to take more risk. Sometimes, people twist that around and say - if I take more risk, I'll get more returns. It doesn't work that way. If there was a guarantee you'd have more returns, there wouldn't be risk.' He is sceptical of efforts to raise financial literacy, however. Among investors, such lapses in judgment are a failure of common sense, he says. Can common sense be taught? 'We've gone from a society where if you have a problem, you bear some blame, to one where we say, 'They did it, but I didn't do it'. Before the crisis, returns on capital for taking risk were very low. If you increased risk, you had a very little increase in yield. In the effort to get higher returns, we pushed that too far. 'There are a couple of reasons why that occurred. One is the agency situation: People making decisions were rewarded on a short-term basis for a higher return. Another was that people suspended belief. I don't know if it's naivety, but I do think it's a failure of common sense.' He recounts the experience of his late brother-in-law, a successful surgeon. He was offered property some years ago, by an individual who had subdivided it into four plots. The attraction was that a highway would ostensibly be built near the land. He bought one of the plots; the seller would himself keep one. 'I said, why did you do this, you don't know this man. 'I listened to what he said - it was very clever.' I said to him, I don't think you understand what you're doing at all. 'If the opportunity is so good, why is he giving it to anyone? If he doesn't have enough money to capitalise on it himself, what kind of record does he have as a businessman? Just ask common sense questions. 'It turns out that the highway was built and the land rose enormously in value. But what the seller did was he kept one for himself and sold three. He kept the one next to the highway, and three are in the hills behind. You know you're not going to win. Do you teach that in school? I don't think so. We all make mistakes. But it's a serious mistake when the institution that takes care of people's welfare and pensions makes mistakes like that. The people who run those institutions - they are the greedy and selfish ones.' Prof Ross's roll call of achievements in financial research is almost daunting. Based on his profile at the Massachusetts Institute of Technology (MIT), where he is the Franco Modigliani Professor of Financial Economics, he is credited for having invented the arbitrage pricing theory and theory of agency. He was also co-discoverer of risk neutral pricing and the binomial pricing model for derivatives. Models developed by him and his co-workers are standard tools in major securities trading firms. That's in addition to numerous awards for financial writing and options research. Today, he says sheepishly that he manages his time badly. Still, he is committed to teaching, which he calls his 'fun time'. He teaches one course at MIT during the fall, taking under his wing less than a handful of doctorate students in finance. Speaking about them brings a gleam to his eyes. 'I love my students; they've turned out to be spectacular . . . Several of the greatest professors in the world were my students; how can I not be proud? The biggest thing you can do for students is to get out of their way. They can figure out what to do. You encourage them but don't interfere with them. Otherwise, there is too much of a tendency to motivate them to do what you want them to do, and not what they want.' Yet, it is not just in academe that Prof Ross is making his mark. He has also parlayed his derivatives expertise into what appears to be thriving businesses. He heads Compensation Valuation, which specialises in valuing complex option contracts and provides valuation services for companies seeking to expense employee stock options. He is also principal and chief investment officer of Ross Farrar, an investment manager that specialises in the use of derivatives to help alter the return profile of funds and to help hedge corporate risks. Not surprisingly, he bristles at the odium that has been heaped on derivatives in the aftermath of the financial crisis. 'Derivatives are a bit like a scalpel. In someone's hand, it's a weapon, but in doctors' hands, it's life saving. You can abuse anything you want, but you don't ban knives - just as you don't and can't ban derivatives. They improve productivity dramatically. 'I have business that uses derivatives to enhance the performance of large institutional portfolios, and change their risk characteristics. That's the new world. I love doing that. You learn from business what you teach. And what you learn in academe you bring to business . . . 'So derivatives have a bad rap. But there are trillions of dollars in derivatives out there. Some other people think they're very good. You can't run some businesses without them, because you'll take interest rate risk, equity risk. You don't want those risks. You want the value and you're willing to lay off some of the risk and return to produce a better outcome for you. Even the government recognises that it can't stop this and shouldn't. I hope they have the common sense to let that market continue as it is.' Effects of regulation In his talk at NUS, he presented an 'idiosyncratic' view of the crisis which he believes was partly caused by the unintended effects of regulation. Basel requirements for bank capital calls for banks to set aside more capital for riskier assets. Assets of the highest quality - with a 'AAA' rating - required relatively less in reserves. This, he says, caused a rush among investment banks to create AAA securities. 'If you hold AAA securities, you can take on more leverage. So what does Wall Street do? They invent AAA securities. Are you shocked that they would create them? . . . Politicians say they're astonished at the greed. For 500 years, investment bankers have been greedy. What kind of naive politician thinks they won't be greedy now and pursue their self interest? It's what you'd expect them to do.' The failure of quantitative models, also blamed for the crisis, is in part a failure of common sense, he says. 'You put enough data in, good and bad data, and the answer will come out correctly. But the thing you don't spend enough time doing is listening to people who are every bit as smart but don't do mathematics. They have a good qualitative understanding. 'I have a business partner who used to work at a major bank. He left the bank because he said they were making him give corporate loans that were bad loans, simply because they wanted to get more loans out. You need people like that with a good qualitative understanding to help create your data.' He suggests that the world has not seen the last of big company failures. Part of the problem is the involvement of government in the economy. 'I think there are deep structural problems. We don't understand the role of the political economy. We don't think or write about it - it's that interaction between politics and the economy that brings about crisis. 'We wouldn't have had a crisis - at least not this one - if the US government hadn't been so insistent on supporting house prices. We have the same thing, the same villains today.' He wonders what might have happened if the US government had not been so quick to let Lehman Brothers fail, or to rescue AIG and Goldman Sachs. What if steps had been taken to set a floor to the value of problematic securities instead? It's an intriguing thought. Today, the value of some of the securities taken over by the Federal Reserve has rebounded significantly. 'Here is a way to deal with things. There was concern then that the mortgage assets were illiquid, and everyone was afraid of what would happen so we had TARP and TAUP. Here's an easier way. I bring to the regulator portfolios of mortgages. 'They can put their guarantee on the pool, that it won't fall below 60 cents on the dollar. You sell the asset at 60 cents on the dollar, and guarantee that no more than 60 per cent will default. The instruments become instantly liquid.' Prof Ross himself invests most of his funds in illiquid assets, and almost nothing in common stocks. 'I've always felt I had some good information and the best investments I can make are in private, illiquid things . . . I'm in the business of making investments. If I can't see good investments, I shouldn't be in business.' Tax liens Opportunities today are not as outstanding as they were during the 2008 crisis. 'I was just amazed. We were seeing mortgage products that I knew you would double your money in a year, and you did. Now, it's not as attractive, and it's all very niche, pockets of funny things.' An example, he says, is investing in tax liens. These are issued on properties whose owners failed to pay their property taxes. The county in the US auctions lien certificates to generate revenue. If the owners fail to pay taxes, you end up with the property. If they do pay taxes, you earn interest on your investment. 'There isn't a lot of competition in this. You can get 18 per cent return just from the penalties that people have to pay. Best of all, if they can't pay anything, they lose the property and you get it. The tax lien is usually 2 per cent of assessed value. 'Even if the property has dropped to half or 20 per cent of what it's worth . . . you still have 10 to one coverage in terms of collateral, and the wonderful thing is you get a property for 2 per cent investment. That's terrific. That's an example of the things I like . . . funny weird old things.' Meanwhile, the US, he says, has structural issues that cloud its near-term future. But its strength lies in its ability to assimilate great numbers of talented immigrants. 'I don't know where the world is turning, but the US is a pioneer in so many things. The greatest research in biology is going on in the US. Technology in Silicon Valley, innovations in finance. It really is a big, free capitalistic society. I see the problems and I don't talk enough about the good things. 'There are serious problems . . . The new reality is they really can't make cars as they used to, or steel. It's increasingly becoming a service economy. Service is very valuable and can be very productive. These changes are always difficult. To some extent, it has unenlightened government leadership. Deficits are running out of control. The prediction is a deficit that's a quarter of total budget, that's huge. If that's right, that's very scary.' Singapore, he says, will do 'wonderfully well'. 'You have a giant next door called China. You're not just going to live with China, you're going to prosper. It's just what you need - great concentration of human capital, enormous skills in trade and production. 'There's a reason we call Singapore the Switzerland of Asia. Someday, they're going to call Switzerland the Singapore of Europe.'

Oil Price vs GDP growth - The tipping point for global growth

When 2 Big Brothers Meet..... Supergroup and Petra Foods

Finally, these two extraordinary companies have joined hands. I see huge potential and opportunities among them.

Published March 26, 2011

Super, Petra to sell instant coffee in Indonesia

By MAXIE AW YEONG

SUPER Group and Petra Foods have formed a joint-venture company, Ceres Super, to market and distribute instant 3-in-1 coffeemix products and other convenience beverages in Indonesia. Petra Foods, a manufacturer and supplier of cocoa ingredients with its headquarters in Singapore, will hold a 60 per cent stake. Super Group, a local manufacturer of instant beverages and convenience foods, will hold 40 per cent. The initial capital of the joint venture is $1.5 million.
Ceres Super will tap Petra's distribution capabilities in Indonesia, and Super's innovation in coffee products. Super Group's chairman David Teo said: 'We will be able to complement Petra Foods' established distribution network in Indonesia with our manufacturing expertise to enter the fast-growing Indonesia market.'
David Chuang, a director of Ceres Super, agreed, saying Ceres Super will leverage on the brand name and the distribution network.
The joint venture is targeting the instant coffee market in Indonesia, which is relatively new and is growing at about 10 per cent a year. Indonesia is a populous and relatively young nation, and now has the largest coffee consuming market in South-east Asia. A steady rise in income signifies growing demand for convenience products.
Petra Foods' chief executive officer John Chuang said: 'The growth (in demand) for 3-in-1 coffee is tremendous, and we think it is just in its infancy. There are tremendous opportunities and we want to jump into this early enough to take a slice of the market.'
Ceres Super, which will soon launch a coffeemix product, has been engaging in focus groups to understand the taste profile of the Indonesians. 'They (Indonesians) have been drinking traditional coffee a lot, so we want them to switch to our kind of coffee,' said John Chuang.
Commodity prices are rising, but Ceres Super is confident that it will be able to manage costs well. Darren Teo, another director of Ceres Super, said: 'There is definitely pressure, but we have an advantage because we manufacture our own ingredients. We can do a lot of cost control.'

Be humble...because this too shall pass

Success and Humility? How many of us can achieve it? Interesting article.

15 Feb 2011

Be humble...because this too shall pass

By PAUL HENG

THERE we were, patiently waiting to enter the Esplanade Theatre to watch a local play. One of my habits when I go to watch a movie or play is to visit the toilet before the show begins. I was dressed to the nines, as I usually am. In a full suit, no less. I strutted to the toilet and just before I reached the toilet door, I caught sight of a familiar face. We had eye contact for a split second, and then he looked away. It was instantaneous recall for me. Most of us in the corporate world would have recognised the face right away - the man was one of Singapore's more successful CEOs.

We know each other; that's a fact. I would not dare lay claim to being his friend but, for sure, we know each other. I smiled, and tried to make eye contact again. He looked anywhere but at me, and then he looked down at his shoes. By then, I was face-to- face with the toilet door. He was still looking down at his shoes.

I was pretty amused by the incident. The 'nice' part of me says: 'Give him a break. Maybe he genuinely could not recognise me, as he probably meets many people as part of his corporate CEO role.' The cheeky side of me says: 'Can't be. He knows me. We exchanged emails on numerous occasions. We met and spoke to each other before - sitting in the same room.'

More equal than others

It does not matter what the truth is, and I will never know unless I ask the man. As a leadership coach, and one who networks pretty actively in the corporate and social scene here in Singapore, I often meet high-profile and so-called successful people in the corporate, medical, entertainment, etc, industries who behave as if they are more equal than all other mortals. They probably also believe that unless you are holding a job title similar to theirs, or more senior - or, like them, have a lot of money - you have no right to speak to them directly, or even eat at the same table.

The reality is this (and many leaders and successful people either do not know this or choose not to acknowledge it): our corporate roles and success are rarely, and probably never, permanent.

The exception is when you own the company - for example, SME founders. However, this will not hold water the moment you decide to IPO the company - as then, you have to report to the board as well as be accountable to the shareholders. And haven't we heard of owner/CEOs being fired from their jobs?

Also, success is always a journey, never a destination. You may be successful today; but all you need to do is to take one tiny wrong step or say the wrong thing - and all your past glory will be erased. Sometimes your downfall may even be caused by circumstances beyond your control - for example, an epidemic like the bird flu. There is actually very little permanency in this world. (Although one example that comes to mind is parental love and concern for children, grown up or otherwise.)

So, much as you are now high and mighty, and enjoying the fruits of your hard labour - the $50,000 per month salary, business-class travel, club-floor rooms in five-star hotels, etc - be aware, be very aware, that all these could (indeed, will) vanish overnight the moment you leave the corporate or business world, either of your own accord or involuntarily. (I am generalising, of course, and there will always be happy exceptions.)

The most difficult part of that transition for most people is that they come to the rude awakening that many of their 'friends' are no longer around them. While you may have received many invitations to play golf when you were a CEO, you may suddenly find that very few people now want to play golf with you, or return your call - and this even when you are the one doing the inviting!

I recently met the ex-CEO of an MNC here in Singapore. During his corporate days, he would be one whose name and face you saw in the news frequently - someone you could easily slot onto the list of 'movers and shakers'. The person I met at the cocktail party was quite a different person; he was left pretty much to himself. Not many people seemed to bother going up to him to make small talk - quite pathetic actually, from my perspective. I was unsure how well (or unwell) he was taking it. I sincerely hope it didn't bother him too much and that he was able to accept it as part and parcel of the ups and downs of life.

I can say that the reverse was possibly true when he was helming the MNC. I can almost visualise a group of people crowding around him, hoping to shake his hand. The more fortunate would probably succeed in inviting him for a meal or two. I am not sure how many dinner invites he gets these days, if any.

Successful individuals who are also known to possess humility as one of their virtues are sadly quite difficult to come by these days. For sure, they are out there, but you may have to search very hard to find them. I've thought about this issue deeply, and have come to the conclusion that it may actually be quite difficult to remain absolutely humble when one is successful in one's career or business, especially if success is accompanied by more than a healthy bank account.

Right mindset

However, it is not impossible. The secret to achieving this (if you desire it in the first place) is to have the right mindset. And this starts with the acknowledgement that being successful does not give you the right to patronise and look down on others, and exhibit behaviours consistent with the image that you are more equal than others. The sooner you realise that, one day, you will no longer own a business name card and be able to introduce yourself as 'I am So-and-So, CEO of XYZ company', the better. At that time, how do you want others to behave towards you? It's overused, maybe, but completely relevant for me to repeat here: 'Do not do unto others what you do not want to be done unto you.'

So, my dear successful CEOs, MDs, or whatever nice title you now have on your name card: if you have still not realised the (potentially very possible) temporary nature of your corporate role and your status in society, you may wish to pause and take a breather to do some soul searching.

Consider: Am I proud of, and wish to perpetuate, my current behaviours? If not, which behaviours do I wish to change? Why? How can I be a much 'better' person then?

As for my 'friend' outside the toilet, I choose to believe that you genuinely could not remember that we had met before. But even then, returning a stranger's friendly smile would not have made you a cent poorer.

The writer is executive coach and founder of NeXT Corporate Coaching Services

GBPJPY Bottom out for Mega Swing trade??? - Part 2

Finally, the trade I have waiting patiently for.. you can call it luck.. but when the golden opportunity knock on the door, you better be ready and have it all planned out to grab it !

As mentioned in my first post See Part 1 on this potential mega swing trade, the possibility of a bottom out for this pair is high.. somewhat similar to that of GBPNZD. With USDJPY hitting all time low since WWII and with the crisis in Japan at hand, it is a no brainer to start my audacious operation on this pair and start buying and averaging down. It is just a matter of time Japan will have to weaken the yen to dig themselves out of the abyss. Therefore, the lower USDJPY and GBPJPY goes down (see also highly correlated pairs), the lesser risk my Long trade will be.

A panic buying of yen soon followed after the massive earthquake and tsunamis in Japan, and picks up speed when the nuclear crisis went sort of out of control. My initial buy was triggered when GBPJPY hit 2011 low and subsequently my incremental lot size buy orders was triggered along the way down as the pair plunged (while I was sleeping thankfully! i can imagine the emotional roller coaster) as can be seen from the attached H4 chart. The last buy order was triggered somewhere near the bottom with the largest lot size on hindsight. This must be what they call value-averaging???

Bottomline, my gamble that the central banks (well, at least Japan will) will intervene to weaken the yen did materialize and my mega swing trade for this pair was born.

 

Resumption of uptrend for GBPNZD - Part 3

The uptrend channel has been adjusted.. not so perfect but good enough to make some decent money. As mentioned in earlier post , the retracement has begun and a short there at 2.2500 will see a 500 pips profits at 2.2000. Below 2.200 a bottom will be formed before this fellow advance again. A more severe drop will see it reaching bottom of the channel, but it seems fibo 23.6% should be a strong enough defense.

S-Chips stands for "SMELLY" chips ??? - updates

The foul smell is getting stronger again.. Only surprise was this time, it only took bearly 3 months after the Korea dual listing to happen.. The selldown volume was even higher than the highest volume recorded on the day of its first listing in Singapore.... Even though the story is not out yet, it can be clearly seen from the chart its gotta be rotten inside.. See previous post

Nikkei 1995 vs Nikkei 2011 - updates

This fellow has rebounded nicely as expected. History repeating itself. We need to be patient to lure the prey into the killing zone. It getting very close now. Get your firepower loaded and ready! Next to watch out for is sort of a TOP to form. The type of high probability short I will certainly be watching out for is if and when it ever come close to 10000... Looks like a decent enough for me to take a small position pretty soon.. See the ferocity of how it dives and rebound up... when the bounce loses energy, it has to obey Newton's Law... I suppose somewhere near 9000 will be a good target to achieve if you ain't too greedy. Like my experienced friend always reminds.. 见好就收 ! See previous post

Into the killing zone: Silver (update)

Risk appetite is back... A new uptrendline is formed after correction from high historical high of 36.75 saw a downside of 33.56. Look to retest the high again. On the hunt for a possible double top formation. See previous post

DJIA resumption of uptrend

Looks like the correction is over. The force is strong within this fellow... Looks like a no brainer 12000 level will be broken on the upside. 12000-12300 will be the battle ground once again.

Indigestion from Acquisition

18 Mar 2011 Biting off more than one can chew? By MICHELLE TAN WITH the quarterly batch of company results due soon, the impact of various acquisition 'strategies' carried out by companies recently might come to light. Taking a walk back in time, one can probably envision the potential scenarios that could play out after companies make sizeable investments to pay for acquisitions. Some have spent funds buying out competitors or similar businesses and moved on to grow their earnings base successfully. On the other side of the coin, things can go awry when companies bite off more than they can chew by spending more than they can reasonably afford on acquisitions. Abterra Ltd could turn out to be a case in point. Just a couple of days ago, Abterra announced that its subsidiary has entered into a conditional sale-and-purchase (S&P) agreement to acquire an additional 55.22 per cent equity interest in a Chinese mining company for a ticket price of 883.52 million yuan (S$171.7 million) - more than 50 per cent of Abterra's total market capitalisation. The company said the acquisition would be funded by 'internal resources'. This might perhaps raise some sceptics' eyebrows as they ponder just where these 'internal' funds would come from, considering that the company was loss-making just last year, registering a net loss attributable to equity-holders of $8.9 million (before accounting for the proposed acquisition) and remains relatively strapped with debt. In addition, Abterra faced difficulties obtaining credit facilities from banks in the latter part of 2010, which hurt the group's earnings for the last financial year. Then there is the valuation of the asset in question. The Chinese mining company's (the acquiree's) preliminary value stands at 1.6 billion yuan, which is in line with the purchase consideration of 883.52 million yuan for a 55.22 per cent cut of the pie. However, valuing a mining company or any company at all is not an exact science. Also, the valuation was derived via the discounted cash flow method - one that could be significantly swayed by minor changes in assumptions. So in light of the abovementioned, is Abterra spending too much on its proposed acquisition? More importantly, how can investors determine whether proposed acquisitions are beneficial or potentially detrimental to the company? On paper, a company like Abterra may look like a good bet as it deals with the trading of hard commodities, such as iron ore and minerals internationally. The layman investor who hears from the grapevine that commodities are in vogue may think a quick buck could be made buying Abterra shares. The problem is that things aren't as simple as that. There is no shortage of quick avenues for businesses to grow a business. Buy out your competitors or similar businesses and integrate them. With that and a little hocus-pocus, the company now has a much bigger earnings base in quick time. But the fact is that there are potential pitfalls when a company tries to grow via acquisitions. For one, an acquisition target is unlikely to sell its business for absolute book value, unless it is loss making or straddled with debt and basically needs a quick exit strategy. To illustrate, if an acquisition target has $10 million in assets, the acquirer may be asked to pay $20 million due to the former's good reputation and strong management. The excess of $10 million paid by the acquirer will then be booked into the balance sheet as 'goodwill' - an intangible item. As the name suggests, intangible items cannot be physically valued; in other words, there are no assets to back up the extra $10 million paid. So there will be nothing to sell or use as collateral should the company run into cash flow problems. So do not be lulled into thinking that a company is safe when its balance sheet reflects enough assets to balance its debt after making hefty acquisitions. Goodwill is not a normal asset and can be written down overnight if trouble starts brewing in the business. That said, it is a general rule of thumb that companies should build market share in recessionary periods to hopefully leave the weak weaker and make the strong stronger. In contrast, companies that overspend on acquisitions in better times will almost invariably face trying times when turmoil strikes. What investors should do is to hold their horses and spend the time to do some homework before betting on a company that is making a hefty acquisition. After all, a larger earnings base derived from acquisitions might not be as beneficial in terms of shareholder value as advertised by the company itself.

Another prediction on Yen

18 Mar 2011 Analysts take the measure of the yen in wake of crisis By NEIL BEHRMANN IN LONDON JAPAN'S economy is likely to benefit in the short term as a result of the yen, which is expected to weaken substantially from its current unsustainable heights, said Brendan Brown, London- based chief economist of Mitsubishi UFJ Securities International. While Mr Brown, rated the current top forecaster on Japan by Bloomberg, does not predict an exchange rate, Goldman Sachs expects the US dollar to appreciate by some 6 per cent to 84-85 yen within three to six months and 90 yen in 12 months. The US dollar slumped to a post-WWII nadir of 76.4 yen during New York trading hours, but subsequently recovered to around 79 yen. The low occurred at a time when trading volumes were very low, according to dealers. Closures of short yen positions on derivatives markets caused the spike, they said, and the dollar subsequently rebounded on fears that the Bank of Japan would intervene. 'The upward speculation on the yen since triple disaster (earthquake, tsunami, nuclear) struck Japan makes just about zero sense,' Mr Brown told BT. He believes that repatriation of liquid foreign assets by insurance companies will not have much influence on the yen. The knee-jerk reaction of the markets is thus likely to be proved wrong, Mr Brown believes. 'The speculators on yen appreciation point to what happened after the Kobe earthquake in early 1995,' he said. 'But the yen's climb at that time had virtually nothing to do with the earthquake. Much more important was the sudden slide of the US economy into growth recession amid the Mexico debt crisis at the time and a variety of other factors that caused US dollar weakness.' Looking further back, the Tokyo earthquake and tsunami of 1923, destruction was on a scale which also transcended comprehension, Mr Brown added. The yen plunged and remained weak for years until ultimately there was a late short-lived attempt to restore the gold standard in January 1930. Facts and estimates about the present triple disaster for Japan (GDP of around US$5 trillion) are still largely guesswork. But the estimates now circulating put insured losses at around US$35 billion and reconstruction costs for government (central and local) at around US$30 billion. On top of that, there is the non-insured damage in the private sector. Then, there is the loss of economic output as a result of the disasters. Some immediately available estimates put the economic output in normal times in the stricken regions at 7-10 per cent of Japan's GDP. And there is the loss of output from Japan's nuclear power plants, which over a sustained period will have to be replaced by imported energy. Evidently, these total output losses far exceed the damage estimates. Most plausibly, the combination of post-quake forces thus imply that there will be a substantially weaker trade balance over an extended period. This cumulative deterioration of the trade account would surely outweigh any repatriation flows, which were the immediate focus of speculative flows into the yen, Mr Brown said. There is no immediate funding problem for reconstruction and aid as the Japanese government can issue treasury bills.

 

Oil trading: swimming with whales

This is another article I like, particularly the part on using whales as an analogy. Reckon it will get lost in my computer somehow so decided to keep in this blog.

Published March 7, 2011

COMMODITIES
Oil trading: swimming with whales

By TIMOTHY MORGE

EVERYONE is talking about oil now: Will oil stay above US$100 a barrel? Should I buy oil here? Should I sell it?

As a successful commodities speculator for the past four decades, I've had to perfect my tools and my approach to trading the markets. The market is a living, breathing thing, and the rhythm is created by the people with the most money and the largest positions in a given market: the 'whales'. Following a consistent method to identify the proper entry and exit points in a market is critical to successful trading. I never chase the markets; instead, I use my tools to identify where the 'whales' are feeding and then look for potential entries there.

Oil began to trend higher in February 2009 - and I began to buy oil for my portfolio at US$35 a barrel, at an area that had acted as resistance for decades - until oil prices ignited in mid-2004 (what had been resistance should act as support).

The technical analysis tools I have developed and mastered over the past 40 years allowed me to identify the probable path of oil and then plan trades in the Nymex WTI light sweet crude oil futures. By July 2009, everyone was talking about oil going to US$100 a barrel. The majority of the market participants got ahead of themselves and entered long positions with poor trade location.

'Whales' are loners - if they feel oil is going up in the long term, they don't want to have everyone along for the ride with them. They want the majority of the market participants continually 'chasing the market'. This allows them to hand off their positions to the trading public when price gets ahead of itself, as it did in May 2010. Oil sold off hard as many stop-profit and stop-loss orders were executed. But it sold off to an area where the 'whales' were willing to buy: at the confluence point of multiple prior lows.

I had been stalking this confluence point for a long entry but passed on the trade because it did not fit all of my defined trading rules. But when oil prices broke above several swing highs, I began working a 'limit buy' order. I eventually got long at US$71.35 with a tight stop below prior multiple lows; I currently have a profit target of US$114 a barrel on a portion of my position.

I would consider adding to my current long positions (at US$35 and US$71 a barrel) if price fills the open gap just below US$88 a barrel, with a stop-loss order below the prior swing low.

The trading public often feels the market is after them, trying to discourage them at every turn. Having a set trading methodology, trading rules, strict money management, a plan, and the discipline to follow all of these, is critical.

The market gets the majority of the smaller and medium-sized players excited and bullish just before it turns down. Then it turns back up right after they give up and turn bearish. The market breathes and the 'whales' take advantage of the whims of the majority of traders. My methodology is designed to identify the behaviour of the major participants (the 'whales'), so I can trade along with them.

The writer is a CME member and independent trader. He actively trades CME Group products and teaches his trading methodology at www.marketgeometry.com

Resumption of uptrend for gbpnzd - Part 2

This pair still amazes me with its huge movement daily. I cannot remember the historical big moves so
I decided to go back and screen again. On 14th Sept 1992 a single day range was 3300pips and on 8th Oct 2008 (I believe it was Lehman Brother collapse) was 2700 pips! As of now, we are past mid-march for 2011 and the move is around 2400pips from the bottom so one can imagine the kind of movement on those kind of days.

Back to the chart.. I have adjusted the channel as the uptrend continues to develop. Currently it  might see slight pullback purely based on the new channel. The fibo level will be adjusted once a new high is formed in due time. The next realistic target level will be 2.400 which is around 2600pips from current level.  See also Part 1

It's only when the tide goes out that you learn who has been swimming naked

This article is unlike the rest. At last, someone who doesn't just blabber the same old stale stuff  as what the rest of the world is doing.

Black swan Japan keeps world on its toes
By WILLIAM PESEK JR
A SUDDEN shock to the global financial system has a way of uncovering its true state.
As billionaire Warren Buffett famously said, it's only when the tide goes out that you learn who has been swimming naked. Two events since Japan's March 11 earthquake have shown the extent to which our economic reality has no proverbial clothes.
One is that the yen is rising. You would think earthquakes, tsunamis and radiation clouds would have investors actively fleeing yen assets. Not so.
On March 14, a Bloomberg News headline proclaimed 'Yen reaches four-month high against dollar on safe-haven demand'. Some haven, that Japan.
The other is how quickly Timothy Geithner, the US Treasury secretary, got in front of the biggest worry in markets: that Japan will dump its vast holdings of Treasuries to raise cash.
This latter one is worth exploring because its implications would travel farther and wider than the radiation leaking from nuclear power plants. It could just happen, roiling world markets like only a Black Swan-event can.
Theories for yen demand tread similar ground as the rationale for Japan selling its dollars holdings - just less convincingly. We always need a handy explanation for why something is happening. News reports argue that it's all about insurance companies repatriating funds to pay for quake demand.
Perhaps; yet it's only part of the story. The yen has been irrationally strong since the 2008 collapse of Lehman Brothers Holdings Inc. Even with the nuclear risks, the yen is considered a less risky currency than the US dollar and euro. It's not that the yen is attractive. It's that if the currency markets held a beauty contest, the yen would be the least ugly contestant.
The same could be said of US debt. Pacific Investment Management Company's Bill Gross, who runs the world's biggest bond fund, last month dumped government-related debt. Few investors seem willing to do the same.
The reason: What else are you going to buy? Greek debt? French debt? Gold? Try to get your hands on some of the 5 per cent of Japanese government bonds that aren't held in Japan? For better or worse, it's US debt.
That is, unless the Japanese move to draw down large chunks of its US$886 billion worth. It could trigger the nightmare chain reaction officials in Washington have dreaded since 2008. China, which holds US$1.2 trillion of US debt, might act to avoid even bigger losses. The UK (US$278 billion), oil exporters (US$216 billion), Brazil (US$198 billion), Caribbean banking centres (US$167 billion) might follow suit.
So might Asia's other dollar hoarders including Taiwan, Hong Kong, Singapore and Thailand.
If history is any guide, it might now happen. 'Based on the 1995 experience of the Great Hanshin earthquake, the risk of selling by Japanese insurance companies would appear to be limited, at least in the near-term,' says Ward McCarthy, chief financial economist at Jefferies & Co Inc in New York.
Yet the Japan of 2011 isn't the Japan of 1995. Its debt is now twice the size of the economy, leaving far less room to borrow to boost growth than there was 16 years ago.
Also, the Bank of Japan's interest-rate policies are already at zero and beyond. The next step would be massive BOJ purchases of Japanese stocks after the Nikkei 225 Stock Average fell 16 per cent the in first two trading days after the earthquake.
That would be a slippery financial slope, but desperate times do tend to lead to desperate measures. That would certainly be the case if Japan decided to start dropping big blocks of Treasuries on the market. The turmoil would catch many a government policy maker or investor swimming naked, in the Buffett sense.
Who knows? Geithner had a point when he told the Senate Banking Committee on Tuesday that Japan has 'a very high savings rate' and that 'it has the capacity to help deal with not just the humanitarian challenge but the reconstruction challenge they face ahead'.
That would be fine if we knew what to expect. Fire and aftershocks continue to strike the crippled Fukushima Dai-Ichi power plant, as officials battle to prevent a nuclear meltdown after last week's record earthquake. Clouds of white smoke or steam are rising from reactor buildings and moving in the direction of Tokyo.
Will a worsening crisis force Japan to sell hundreds of billions of dollars of Treasuries? We will see when and where the toxic dust settles.

Nikkei 1995 vs Nikkei 2011

It was only 2 days into 3rd week of March 2011 but it seems like reminiscent of a stock market which displayed the same kind of ferocity I have experienced during the financial crisis of 2008-2009. Apart from the tepid sell-down in Asian regional bourses, the real action was in Japanese market. It was literally hammered by the massive destruction brought about by the 8.9 magnitude earthquake and tsunami, which was worsened by a nuclear crisis. For those who had missed out on the plunge, I suppose there are plenty of opportunities that lie ahead as we are still in early days. Simply by comparing the chart of Nikkei in 1995 after the Kobe earthquake and the current crisis, it seems pretty obvious the downtrend will last for weeks or even months. Anyway, the dive was overdone in my opinion and we should be seeing a rebound soon which will be a second killing ground for a lot of speculators. By the way, some of my foreign colleagues were affected in this crisis and some even lost their homes or families entirely in the process. Kudos to my association, it has decided to set up a relief fund and needless to say, profits will go towards this fund.

Into the killing zone: Silver

Good call there by evilspeculator on 9th March which correctly identifies the toppish silver, and the profit taking did materialize. What surprised me was the late push in the last few hours before the weekend from a low of 34 to 36!
Since this is the first post on silver, I shall start from the megatrend of silver. From the weekly chart, one can see that historically in the last 10 years, the bull cycle each lasted about 2 years from trough to peak. The bear was fast and furious, each lasting for few weeks to months but less than a year. Currently, it is into its third year of bull run and not surprisingly, the past few months of price advancement is nothing short of euphoric. The bears are now dangerously lurking as silver enters the KILLING ZONE. Never mind the bulls have been shouting that this time is different (4 most expensive words according to John Templeton) with the emerging markets consuming more than ever commodities and with everyone's consensus that greenback is coming down in the long run (in the long run, everyone is dead !!!) and thus its certainly a no brainer betting on commodites, but I'm not about to argue with the tape. From the daily chart, it seems that the late push from 23.6 fibo to close just below 36 suggest that the bull is still raging and still has some legs to run. Looks like I'll just have to sit tight with my long positions and diligently get out entirely before the slaughters begin...

S-Chips stands for "SMELLY" chips ???

Once again, S-chips, the so called Singapore listed China-based companies, are emitting the sort of pungent rotting smell they did since they came to existence on the Singapore bourse. Over the past 2 weeks, there have been a number of reports concerning China Hongxing and Hongwei, whose shares's trading has since been halted.

What caught my eyes was a comment by a fellow forumer post (on the article below):
"i dont get it. for every seller there has to be a buyer. to allow minority shareholders to get out implies allowing another "sucker" to get into the company. If the new-comer is fully informed, fine. But it can just as well be someone who has not kept himself informed. How can this be good"

I laughed my head off. This is conspiracy theory at its very best. Those with some sort of insider information has already dumped the shares before first sign of decomposition.

The article also mentioned : "But surely there is some room for a solution to address the concerns of innocent shareholders who are being punished for a mess which is not of their doing."

My thought about this is that in the game of financial world, be it speculation, investing, or whatever you called it, there is no innocent player. If you partake in it, you will be guilty as charged. There is only Winners or Losers, Greed or Fear,  no place for crying babies.
 

Provide small investors a way out of suspended companies

SHOULD small investors be left holding the proverbial baby for a seeming eternity when a company's stock is suspended following the discovery of some irregularities?

That is the question David Gerald, president of the Securities Investors Association (Singapore), raised this week in the wake of the suspensions of China Hong- xing and Hongwei Technologies after their auditors refused to sign off on their accounts.

The two companies shocked the market when news broke over the weekend that their auditors (Ernst & Young in both cases) could not finalise the audit for the financial year ended Dec 31, 2010, as they could not confirm the cash and bank balances in the companies.

The stocks were promptly suspended.

These two are just the latest in a string of S-chips which have hit the rocks over the past three years due to a variety of serious issues. Most remain suspended, and some have been ultimately delisted. And in the process, thousands of shareholders - the majority of whom are retail investors - have lost huge bundles of money.

Mr Gerald reckons the sudden suspension of Hongxing and Hongwei has left some 14,000 minority shareholders in a quandary. And given the precedents set by previous suspensions of other S-chips under similar circumstances, there is a high likelihood that these two counters will remain suspended for months, if not years.

Being the advocate of the retail investor that he is, Mr Gerald also suggested that trading of the shares be allowed to continue, but under certain restrictions.

He has a point.

One can debate endlessly about the merits of trusting S-chips, and the principle of investors taking responsibility for their own actions.

But the fact remains that these are companies which were listed and traded on the local stock market, where they are accessible to all variety of investors, be they sophisticated ones or the 'moms and pops'. And all become equal victims when irregularities are detected and the shares are frozen for an indefinite period.

The Singapore Exchange (SGX) is perfectly correct when it says that allowing trading of shares in China Hongxing and Hongwei right away would be more detrimental to shareholders and throw the fairness and transparency of the market into question. Of course, investigations have to be done, and transparency has to be restored.

But surely there is some room for a solution to address the concerns of innocent shareholders who are being punished for a mess which is not of their doing.

Suspension means just that: no trading, no price discovery and no market value for the security.

One solution may be for the authorities to set a timeline for the investigations, and thus the suspension. This timeline - say, six months - would not only enable special auditors to come up with a preliminary report which would provide more information to the market, but also provide a cooling-off period.

Once this period is over, there could be restricted trading in the stock. Investors would have at least some facts with which to make informed decisions.

The controls can be as tough as necessary, with restrictions such as cash-only trades, a total ban on short-selling, and barring all insiders or company officials from trading their stock - whatever is necessary to ensure an orderly market.

The point is to allow the market to price the stock and, more importantly, to give minority shareholders a viable exit strategy.

Hongxing, for example, was among the most actively traded stocks on the market for weeks, if not months. Its market cap was some $500 million a week before the suspension. This value now remains trapped.

Of course, the price will likely collapse on resumption of trading. But even if it drops to, say, 3 cents, this would be better than the imputed zero-value as it remains suspended.

Resumption of restricted trading would not only enable sellers to exit, but could also attract potential buyers. These could be investors who hope to make a windfall gain if and when the company - which still has a thriving sports retail business in China - gets its act together.

The whole process enables price discovery and provide transparency. It also gives hope to the thousands of small investors who have collectively invested millions of dollars in the company.

Not quite the perfect solution, but far better than the black hole many innocent minority shareholders find themselves in.

Double bottom for DJI

A double bottom has formed for DJI (easier to be distinguished on H4). Bullish break above the neckline will see it retesting 12400.

A horse’s odds of winning : Charlie Munger

Found this article by Charlie Munger online. Another wise man. Interesting analogy.

“A lighter, sleeker, well-trained horse with a stellar record is very likely to outrun a heavy, out-of-shape pony with a poor track record. Even a novice can understand this. But if the damn odds are like this, the inferior horse’s odds of winning are 100:1, and the better horse may be around 3:2 odds of finishing first.

"So by using simple mathematics, it is anything but simple to comprehend which horse is a better vehicle for making some money. The same can be said for share prices and market volatility... so it’s also difficult to outsmart the stock market most of the time.”

To Munger, the so-called “odds” are the price of doing business.

"If you stop to think about it, the racetrack and the odds you face when you place a bet are, in fact, a market. If more people play the ponies, the more popular picks will see their odds go up accordingly. Just like a stock, the more people buy its shares, the higher its valuation climbs. This is the nature of share prices – the more they get bought, the hotter they get. Some call this “overheating.”

So before placing a bet – or buying a share – buyers must first take into account both the underlying fundamentals of the potential investment as well as the value of the target at the current price. If the price exceeds the value, then it should be avoided. At the racetrack, when people approach the counter single file and place their bets, the odds increase steadily for the more popular choices and reflect a more long-term position, if you will.

However, if everyone places their wager within a short period of time, the odds quickly go through the roof for the most sought-after fillies, just as when there is a surge in orders for a particular stock.

Munger observes that the successful long-term investor fully understands his stock’s (or mare’s) core capabilities and potential, and he or she also very likely has a fundamental understanding of both mathematical principles as well as having a good head on his or her shoulders. And his disciples will do well to remember that a horse with a 50% chance of winning any race will likely have odds of 3:1 given it.

This, of course, makes for a great deal of difficulty.Munger said: "Some 98% of the time that we are 'watching' the market, we are in fact just waiting for something to happen and have no idea which direction things are headed. Only when we deeply ponder the relative price and value of a particular counter at any given time can we begin to see advantages, and that is when opportunities suddenly land in our lap."