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Written by Benjamin Yeo
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Tuesday, 26 June 2007 |
One of my favourite investors is Jim Rogers. He shares the same view as me on oil:). If you are holing onto oil related stocks, hold "forever". Like Jim, I am also plan to hold one of my China stock "forever". Jim also talks about commodities here.
Look at Noble Group (recommended at $1.22) and now $1.70:)....
China Stock Market Bubble Won't Yet Burst
China's booming equities market, the key barometer of the health of the world's fastest-growing major economy, is an "incipient bubble" but can't be characterized as one waiting to burst just yet, renowned global investor Jim Rogers said Wednesday.
27 June 2007
SINGAPORE (Dow Jones) -- China's booming equities market, the key barometer of the health of the world's fastest-growing major economy, is an "incipient bubble" but can't be characterized as one waiting to burst just yet, renowned global investor Jim Rogers said Wednesday.
The Chinese government, however, will need to do more to cool the domestic economy, amid risks of a global fallout in the event of a hard landing.
"If (the market) doubles, it'll be a full-fledged bubble and that's when I'm going to pull out," Rogers said of the Shanghai and Shenzhen stock markets.
"And I don't want to do that - I want to hold on to my Chinese shares all my life," the billionaire investor told Dow Jones Newswires in an interview.
Rogers, a longtime bull on China and best known for his decades of successful bets on global commodities, said Beijing is doing what's needed so far but will need to keep monitoring.
"There are plenty of things they can do. They could raise interest rates and make their currency convertible so you could arbitrage. And they could tax capital gains," he said.
He noted there is excess liquidity globally, but described China as a "closed circuit" given that foreign investors don't have full access to it.
As a result, domestic investors are feeling "trapped" and are instead pouring money into shares and property - feeding the bubble further.
Little Danger Of Global Meltdown
Rogers, who first turned his attention to China around the time of his first visit there in 1984, however downplayed the risks of a widely feared global meltdown, should the Chinese economy tumble.
Investors were spooked when a near-9% drop in the Shanghai Stock Exchange index in February triggered a wave of selling around the world.
He suggested China's stock markets could come off significantly, using a ballpark figure of 70%, but the country's economy could still grow "3%" because it has broader-based fundamentals.
In China and elsewhere, "I'm bullish on agriculture (commodities), the renminbi, the yen. And I won't sell U.S. dollars right now," Rogers said.
He noted in particular that the Japanese currency may have plenty of upside given the potential unwinding of so-called yen carry-trades.
Further, he's also positive on the Canadian dollar but not the Swiss franc, and in terms of stocks, favors "airlines over stockbrokers."
US Most Vulnerable
Rogers, 65, cofounded with celebrity investor George Soros, the Quantum Fund in 1970, and created the Rogers International Commodities Index in 1998.
Increasingly, he sees the U.S. economy as vulnerable and Europe and Asia "less so."
"America is probably already in recession," he said of the underperforming automobile and housing sectors, noting how the latter has now led to problems in the financial services sector.
He said central banks, including the U.S. Federal Reserve, aren't doing all that's necessary to contain excess liquidity, and that some policies are unsustainable.
"(Fed chief Ben) Bernanke is printing more and more money. If central banks continue on this path, there would be the demise of some of them," he said.
His remarks came just days before July 2, the anniversary of the steep devaluation of the Thai baht that triggered the East Asian economic crisis 10 years ago.
Buy Oil, Commodities
Amid this uncertain outlook, investors could fall back on commodities, including energy directly rather than through equities, Rogers said.
He noted how commodities have historically showed a "supply-demand imbalance" that offers an opportunity: if stock prices collapsed, any dip in commodities prices is a chance to buy.
Meantime, while "there's been no more 'elephant' discoveries for 40 years," there's little risk of running out of oil just yet.
Rather, the world is likely only running out of "excessive oil, known oil," and doesn't necessarily mean reserves are about to be depleted, he said.
Rogers, who will deliver a lunchtime presentation in Singapore next week to a group of equities investors, also touched on geopolitics.
The U.S., as the world's only superpower, hasn't addressed the issues of global security nearly six years since the Sept. 11 terrorist attacks, he said.
"America's making a terrible mistake right now," he said of U.S. engagement in Iraq and its role in the Middle East, suggesting the situation could worsen later this year, toward the presidential elections.
Problems, including mounting tensions between the West and a nuclear-ambitious Iran, are likely to persist beyond the end of President George W. Bush's second and final term in office that ends in January.
"If war breaks out, buy commodities," he said |
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Written by Benjamin Yeo
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Saturday, 23 June 2007 |
Latest US economc data is again positive. The Conference Board's index of leading economic indicators increased 0.3% after a 0.3% drop in April. The rise adds to evidence that the US economy is recovering after growing last quarter at the slowest pace in more than 4 years. Economists have been raising growth forecasts on signs of stronger business investment and a resilient labour market that's helping consumers deal with higher fuel costs.
One of the most reassuring features of the economy has been job growth and we expect that to persist. Retail sales last month rose by the most in more than a year.The slowdown in the US economy may be short lived with growth this quarter projected by some economists to exceed 4%.
The Dow cannot keep going up. They could find some reason to bring down the market before they bring it up again. Market down last Friday despite bond yields decrease.
US Fed chief Ben Bernanke's efforts to expand the US economy in the second half of the year seems to be paying off. Some people never gave Ben much respect when he just started his job and might have "over glorified" his predecessor to some extent. Give Ben some credit...... |
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Look Under The Hood To Know A Company's Fundamentals |
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Written by Benjamin Yeo
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Saturday, 23 June 2007 |
Sunday Times 24 June, 2007 - Look Under The Hood To Know A Company's Fundamentals
Many individual investors do not use or understand fundamental research. They rely on charts, scuttlebutt from chat rooms, convictions based on fuzzy information like a positive article in a newspaper or magazine, or a good yarn from their drinking buddies.
They should be looking at facts - the trends and the abilities of management of the companies in their portfolio.
By evaluating income statements, cash flow statements and balance sheets, you can better understand a company's ability to generate cash and profits(the ultimate goal of any business) and to compete with rivals to either take market share or protect it.
At the end of the day, the success of the stock will depend on management's skill set in various economic conditions to deliver on promise.
These elements are the underpinnings of fundamental analysis and they cannot be determined by looking at chart patterns.
End of article
Instead of looking at the above, people sometimes "worship" analyst too much or they keeping looking at a stock's 52 week high and low price. A good management team is important when choosing a stock. One of the reasons I bought Swissco is that it has a very experienced management team. A "sexy business" is not much use without a capable management team. |
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Last Updated ( Saturday, 23 June 2007 )
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It May Not Pay To Follow The Crowd |
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Written by Benjamin Yeo
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Saturday, 23 June 2007 |
Business Times 23 June, 2007 - It May Not Pay To Follow The Crowd.
A small investor who does his own research can outdo the big boys
Here's another reason why a retail investor who has done research can significantly outperform the big funds, and why following the the crowd will not yield supernormal returns for you.
There are a lot more stocks in the market than there are analysts. It is impossible to cover all the stocks listed on the market. So broking firms and analysts have no other options but to pick and choose the stocks to cover.
And since analysts in the broking forms are paid for by the commissions generated by their forms, it makes sense that they will concentrate their efforts on companies with big market capitalisations which are highly liquid. These counters wil generate the bulk of the trading commissions for the broking firms. So, in other words, stocks which are hardly traded also tend to be the ones neglected by stock analysts.
In contrast, a thinly traded stock may remain undervalued for some time before the market wakes up to its potential. Once that happens, there will be increased trading in the counter, which will lead to analysts initiating coverage of it, which in turn, may generate even more interest from investors.
End of article.
Just note these points :
1. Well this article is true in way but also not true in
some ways. If you had followed the "crowd" and bought
Cosco 3 years ago and held until now, you would have a
major windfall.
2. As I mentioned before, there are those who are pure
followers of analyst and their target price. If the
stock is not coverd by analyst, they think the
stock is lousy.
When FerroChina was at 70c and not moving, some might
say"Not moving and not covered by analysts so must be
a lousy stock. Further more it is a China stock.
FerroChina is now $2.25.
Noble Group had a mean broker recommendation of 85c
and at that time Noble Group was about $1 and some say
lousy stock as past the mean target price. Well Noble
Group is now $1.76.
If you "worship" target price so much, then you
would have sold ASL Marine at $1.50 as that was
the target price by analyst, but the stock is
now $1.86
Swissco target price was about 84c but now it is
$1.20.
3. One thing I don't understand is people say"The
stock is not moving leh. Why buy?". Then when
the stock
suddenly moves up by 7c, they say"Aiya, miss
the boat". Anyway when it is up 7c, it has only
left"Jurong Port" and not as if it left Singapore and
suddenly reach Alaska so it is still ok to buy if the
destination is Alaska. ASL Marine was like a sleeping
tiger and never moved for a long time from 90c to $1
and back to 90c. It is now $1.86!
Remember in one of my past mails, I said you leverage
up (borrow money to buy more shares with margin account)
once it break out of consolidation phase of $1, and buy
more at $1.02 and say $1.05. Then you stop and don't
buy any more.
4. The best analyst is YOURSELF if you take the
effort to find out information, read etc. Just
read analysts with a open mind and don't need to be a
pure follower.
Lastly, you don't need to buy soooooooooo many stocks as it is harder to focus. Just remember that when you have soooooooo many stocks, you expose yourself more to the market and when the market crash, all the stocks will also crash. Your mind will not be fast enough to work the sums in your head..... |
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Don't Underestimate Emerging Market Impact |
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Written by Benjamin Yeo
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Wednesday, 20 June 2007 |
Business Times 20 June, 2007 - Don't Underestimate Emerging Market Impact : Putnam
It says developed economies no longer engine for global economic growth
US fund firm Putnam Investments reckons many investors are not properly valuing what emerging market economic growth can mean for stocks in developed economies.
Putnam's overarching theme is the well trodden one that globalisation and better control of domestic economies, along with financial surpluses, have created a different world in which emerging markets are here to stay as economic powerhouses.
"The US and the other developed economies , are no longer the engine for global economic growth" said ShigekiMakino, chief investment officer for global core equities.
End of artice.
If you are looking to invest, pick a theme. For instance with oil related stocks, hold "forever" as oil price is going to stay high for a very long, long time. Another great theme is that of emerging markets. Infrastructure is a major theme in emerging economies. Ask yourself what is needed in emerging economies and you will know what to invest and HOLD for the long term. |
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Last Updated ( Wednesday, 20 June 2007 )
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Bond Rout Eases Pressure For Fed |
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Written by Benjamin Yeo
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Monday, 18 June 2007 |
Business Times June 18, 2007 - Bond rout eases pressure for Fed, ECB tightening.
Higher market rates mean pricier loans for homes , credit cards, investmnet.
The 6 week global bond market rout may be doing Ben Bernanke and Jean-Claude Trichet a favour.
The higher market rates, if they continue mean pricier loans for homes and credit cards, and will make it more expensive for companies to invest and make acquisitions. That in turn may limit the need to raise interest rates to cool inflation pressures amid the strongest global economy in a generation.
After years of failing to move in tandem with rates set by central banks, US and European yields have surged to their highest levels since 2002. The yield on the US 10 year note has climbed 52 basis points in the past month and rose to 5.32% on June 13, the highest since April 2002. |
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Written by Benjamin Yeo
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Sunday, 17 June 2007 |
The Yen went into what some analysts say could develop into a free fall after the Bank of Japan's Policy Board again declined to raise interest rates from 0.5%.
BOJ governor, Fukui said,"We need to see US economic developments. We also want more proof of the sustainability of domestic demand such as capital spending and household consumption. The yen plunged to a four and a half year low of 123.28 against the US dollar and sank to a near record low of 164.04 against the euro.Tokyo stock market on the other hand, hit their highest level for a week. The cheap yen is the most positive factor for the stock market. It's a boost for the Japanese economy. With the cheaper yen, Japanese investors pour money into higher yielding foreign securities.
With this latest news and unalarming inflation data from the US, our stock market is likely to be bull next week as fears of the "Yen carry trade" temporarily subsides. |
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Interest Rate Fear - Unfounded |
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Written by Benjamin Yeo
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Friday, 15 June 2007 |
Indeed latest US data has showed that inflation fears were unfounded. US market Dow responded by going up another 70 points last night. The call on interest rate hike on inflation fears was not a right one.....
NEW YORK : Wall Street rallied for a second consecutive day on Thursday as investors put a positive spin on a mixed report on wholesale inflation.
The Dow Jones Industrial Average posted a gain of 71.37 points (0.53 percent) to close at 13,553.72 and the Nasdaq composite gained 17.10 points (0.66 percent) to 2,599.41.
The Standard & Poor's 500 broad-market index rose 7.30 points (0.48 percent) to 1,522.97.
The market kept momentum from Wednesday's strong rally, which saw a 1.5 percent surge in the broad market after the Federal Reserve said in its Beige Book report that economic growth appeared to be picking up while inflation was holding mostly steady.
Thursday's report on US inflation at the wholesale level showed a jump in energy costs pushed up the producer price index (PPI) by a sharper than expected 0.9 percent in May. But "core" prices excluding food and energy rose a tamer 0.2 percent.
"Today's PPI data provided the market with a boost," said Gregory Drahuschak at Janney Montgomery Scott, noting that it supported other data in the past few days suggesting inflation is largely in check.
But Drahuschak said a key to the rally will be Friday's consumer price index (CPI) report, which shows the more significant data on inflation at the retail level.
"If the market does not get a surprise from the CPI report tomorrow, the S&P 500 could make an attempt to challenge its recent peak around 1,539," he said.
Analysts said the PPI figure had a potential to roil the bond market but that the core price index, often seen as a better gauge of future trends, has suggested inflation was largely in check and should allow the Federal Reserve to hold interest rates steady.
"The subdued, stable core PPI reading and cooling pipeline pressures show that this is one inflation report the Fed does not have to worry about," said Michael Gregory at BMO Capital Markets.
Fred Dickson, market strategist at DA Davidson, said stock traders would take their cues from the bond market. Stocks were rattled in the past week by a spike in bond yields, but the Treasury market appears to have stabilised since
then.
"We see more volatile trading days ahead on Wall Street with equity traders reacting to even the smallest jiggles in bond yields," Dickson said.
Bonds showed minor losses as the market stabilised from the big sell-off over the past week. The yield on the 10-year US Treasury bond rose to 5.217 percent from 5.200 percent late Wednesday. The 30-year bond yield increased to 5.292 percent from 5.276 percent.
Among stocks in focus, General Motors raced forward with a gain of 1.50 dollars or 4.7 percent to 33.60 amid reports it was near a deal with its bankrupt former parts unit Delphi and the United Auto Workers union to provide a one-time cash payout in exchange for lower hourly wages.
Goldman Sachs tumbled 7.89 dollars or 3.4 percent to 225.75 after the investment banking giant reported a profit of 2.3 billion dollars in the past quarter, nearly unchanged from a year ago, as results were hurt by a slumping real estate market.
Rival investment firm Bear Stearns rose 11 cents to 149.60 as it beat most analyst forecasts even though it reported a drop in its fiscal second-quarter earnings. - AFP/de |
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Interest Rate Fear - Revisit |
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Written by Benjamin Yeo
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Thursday, 14 June 2007 |
Referring to my previous post 'Interest Rate Fear' I posted just a few days ago. Indeed despite fears of a interest hike, the US Fed kept interest rate unchanged and US market Dow went up 187 points last night! Current US Fed chairman, Ben Bernanke has done well to engineer a soft landing for the US economy. Former US Fed chief, Allan Greenspan may still move markets with his words but the current US Fed chief is Ben and not Allan. Its been more than a year since Ben took office as US Fed chairman, and really due credit should be given to him........
Look at pure fundamentals and you'll know where the market or share price will go..... |
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Industry Shortage is in People, not Oil or Rigs |
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Written by Benjamin Yeo
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Wednesday, 13 June 2007 |
Business Times 12 June, 2007. Asia Oil and Gas Conference. Industry Shortage is in People, not Oil or Rigs
Asian state oil firms are losing staff to peers with deep pockets, raising safety risks.
The oil industry's most pressing shortage is not fuel, or rigs, or even access to fields in increasingly protective nations, executives say, it's people.
Asia state oil companies wth ambitious growth plans in particular are feeling the pinch as they lose staff to peers with deeper pockets, raising safety and expansion risks as the industry's most exprienced workers head into retirement.
While the industry has responded quickly to the lack of spare oil production and refining capacity, and there appears hope for some easing in the oil equipment sector, executives and officials fear that refilling the people pipeline will not be as easy.
Salary inflation has also been part of the reason for the leap in project construction costs that is in some cases doubling or trebling the price of a new project. As much as 3.8 million barrels per day of refining capacity that had been planned in Asia and the Middle Est may now not be built due to higher costs, Fereidun Fesharaki, chairman and CEO of consultancy FACTS Global Energy said. If not properly addressed, the personnel shortage is a real risk of a global supply crunch due to capacity constraints and project delays.
End of article.
Currently we try to get skilled professionals from overseas. This might not be so easy in the future as India and China's economy booms and professional wages in their country go up.
There is currently not enough investment to meet oil demand and part of the reason is high costs. With insuffcient investment, oil supply will struggle to meet demand which will continue to increase with China and India's economy booming for many years. This will result in oil price staying high for a very long, long time ......... |
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