10:16 am - Market Report - Bill Wermine

Dear Traders,

While in Singapore for a business trip last month, I picked up a book Investing Against the Tide by Anthony Bolton, Bolton was head of Fidelity Asset Mgt in London before recently retiring. He is a humble low key individual who does not like public exposure and his book is his parting gift.

His performance for the fund he managed averaged over 20 % per year over 19 years which rivals Warren Buffet. His performance was steady and consistent with a maximum volatility of 18 % meaning his worse
loss was 18 %

He also used technical analysis to filter his fundamental picks. He said he was only right 60 % of the time and remember he had access to the best research, technology and business contacts. He also always established an exit plan on all his investments both for profit or loss.

What is interesting is a statement he made related trading to golf. In golf there is a term called Mulligan. Mulligan means you get a second chance after making a bad shot. In the stockmarket there are plenty of mulligans. Rarely do you only get one chance. If you miss the chance for a good entry it is likely you will get another chance. In otherwords it is a bad idea to chase a trade. Just be patient.

Presently the KLSE is extreemly overbought. The crowd is super bullish. All the news from CNBC, Bloomberg, The Star, The Edge etc. is bullish. The world wide recession is over proclaims most stock broker houses. In fact my seminar indicator tells me a different story. We have a full house for our Master the Markets Foundation Course Monday. This was without advertising or holding previews. In fact we have to turn people away because the room is full.

We are getting calls from previous preview attendees as far away as Penang/ Sabah and Johor, who have finally committed to attending after months of soul searching and worrying about paying our very reasonable seminar fee.-

My seminar indicator means we are close to the top. When we only get 5 or 6 attendees we are close to the bottom.

My advice is focus on high quality dividend payers and buy tests of recent supports on any bad news and carefully define an exit plan.

There is more risk on the downside than reward on the upside so you need to carefully manage your trades.

For our Wrap account holders, our AUD currency Man investments are earning good currency gains while the fund has had some losses. Should trends emerge the Man Fund should do well both from the AUD side and the fund performance.

The AUD/ RM rate appears ready to break the RM 3.00 level on course to RM 3.26. I also like the EWA, the Australian Sock market ETF as the Australian market has a lot of swing freedom for another 16 % rise but: Remember to wait for your Mulligan.


Have a profitable week ahead,
Bill