7:51 pm - Market Report by Bill Wermine

Dear Traders,

Warren Buffet made an insightful statement in a CNBC interview about the financial crises. He compared it to the Hawaii Pearl Harbor attack by the Japanese which killed several thousand Americans and sunk several battle ships. This was similar to the October 2008 Lehman collapse which almost froze the world financial system. The Lehman financial shock according to Buffet is the catalist for recovery just like Pearl Harbor being the catalist for America to consolidate their forces and defeat the Japanese.

In the meantime, you need to have an exposure to gold.

On Sunday 10 May- Mothers Day- we are holding our gold conference at Armada Hotel from 2 to 5 PM. Cover charge RM 25, pay at the door. Please let me know if you wish to attend.

This time we will have a Gold Fund Manager present his outlook and strategy for gold and commodities. I have arranged for one of our staff to escort this man as he is coming from Singapore. I promised that a gold Fund Manager would present at our traders club last week. He did not show up and his excuse was he could not find the venue.

That was a lame excuse. It would be like a local not knowing where is the KLCC Towers or a New Yorker not knowing the location of the statue of Liberty.

Martin will present his Gold Timing Technical system with backtest results. This will help if you to time futures gold, a gold ETF or a gold unit trust.

A gold shop dealer will man a table outside if you wish to buy a gold bar or chain for your mother

I will play Kiyosaki / Jim Rogers video clips which explains how the US government are debasing the US Dollar and why you need an exposure to gold and commodities. Gold is the only real money.

For Man AUD diversified account holders we are now on the right side of the trade.

On the attached chart, the AUD has broken out from a 7 month congestion and closed last night at 7305 to the US dollar.

Demand is coming in and if you believe Warren Buffet- recovery is slowly taking hold. This will push the AUD to the next target of 8000- a 12 % boost to our Man investments not counting performance of the fund itself.

I know it has been painful waiting but I congratulate those who kept the faith and did not lose your objectivity.

Some of you were worried that the Australian banks/ would collapse and you would lose your capital guarantee.

I am under the understanding that the Aussie Banks are more prudent and more regulated than the US banks and have only a minimal exposure to toxic assets. The US banks have been pulled down because of massive fraud, corruption, cronyism with cover from the crooked politicians - the foundation set by George Bush and his band of robbers.

However; when emotions come into play- logic and commen sense goes out the window.

Below are the facts which fly in the face of emotion. This report is a fact.

Here is a report from Reserve Bank of Australia who underwrites our capital guarantee: 4 Australia banks are rated in the top 50 of world banks. Only 1 bank in the US is in the top 50. NAB is our underwriter and NAB is rated 11 in the world out of thousands of banks.

Australia
National Australia Bank (#11 Worldwide)Banking Industry as of 3/09Size of Banking Industry: $2,674 billion AUKey interest rate: 3.25%Number of commercial banks: 15Other Banks in Top 50Commonwealth Bank of Australia Australia & New Zealand Banking Group Westpac Banking Corporation Down under, the safest bank on the rankings is the National Bank of Australia, with a market cap of 34.28 billion AU. Three other banks in the country also make the list.Source: Reserve Bank of Australia



The KLSE is recovering and look for a target of 1050 in days ahead. For managed accounts our quality share portfolio with dividends have protected us and I will continue to persue this strategy.

We bought some more Pet Dag shares last week at 7.70. It has a beautiful chart which shows a gradual up trend and a target of 10.10. Risk is 6.60.

The 6.2% Pet Dag dividend is supported by their free cash flow and strong balance sheet reflecting increased sales and earnings. (even in 2008)

I have always liked PetDag. They are expanding their mini marts and business clusters around their stations which increase their cash flow. PetDag also has very clean toilets and well trained staff compared to some petrol operators.

They have also expansion plans for more stations in strategic locations.

Have a good week
Bill