Monday, January 19, 2009
3:36 pm - KLCI looks to break 890 today !
Unlikely I think as there is no catalyst to break with the swore-in of Obama on Tuesday and holiday in US tonite.
11:53 am - KLCI is testing 890 level for 3rd time.
The more time it is testing it, the highly it can break thru the support level .
11:46 am - Market Outlook by Bill Wermine
Dear Traders,
Dante Aligheri, an Italian poet of the 13th Century wrote the masterpiece Divine Comedy, an epic tale about hell, purgatory, and heaven. Hell is described as the living place of Satan, devils and wicked souls, all condemed to eternal punishment after death; a place of pain and torment. At the entrance of hell is a sign, "Abandon hope, all ye who enter here."
It certailly feels like Dante's inferno on Wall St these days amid the worst economic times since the great depression of 1930. The global economy is reeling from the sub-prime mortage meltdown that has infected the entire financial system. shaking investor confidence and breeding deep mistrust. The fraud scandle engineered by Bernie Madoff, fund manager, stealing billions of dollars in a pyramid scheme has only made matters worse.
Global Money Trends 16 Jan 09
This cartoon drawn 15 years ago by Bill Watterson sums up what happened. He saw it coming ! One of our recent graduates forwarded this: If you have anything useful to share please forward to me. I really thank the gentleman who contributed this
My advice: lighten up on all your long US share positions on a run towards Dow 9000 which may happen on the short term euphoria of Obama who is characterized as the 2nd coming of Christ. When people see Obama is not Christ expect the Dow to collapse. YOu may purchase on the NYSE LQD the ETF dealing in high grade corporate bonds and at the same time short sell TLT the 20 year government bond ETF.
Currently the spread is trading at 16 and should narrow to 6 in weeks ahead. US Treasury bonds are topping out on lack of demand narrow range bars ( Who wants a return of only 2.1 % on a 20 year bond ?) while high grade corporate bonds are performing well as a safe haven. The interest rate for this fund is over 5.8% with a chance of a handsome capital gain. The downside of this spread trade is limited unless the sun fails to rise tomorrow morning- a nuclear attack or a comet hitting the earth. I am joking: if the spread widens to 22 cut the position.
A spread is safer than an outright long position on the LQD should we have another major bank collapse or financial disaster.
The same goes for the KLSE deal in non cyclicals such as food/ beverages/ plantation companies/ tobacco/telcom/ power- even if the economy slows people still have to eat, use electricity, hand phones, internet and smoke. Avoid banks, small caps, speculative shares- it is OK to trade for quick profits but make sure you have a written trading plan with a clear exit strategy win or lose and have the discipline to execute.
Obama favors green/alternative energy, bio fuel. He unlike George Bush is not in the pocket of the oil companies and he said he will support bio- diesel and that should favor plantation companies. Only play the solid fundamental well managed cash rich companies but be ready to take your profits when the Obama mania wears off- perhaps when the KLSE approaches 1000/ 1200 and Dow at 9000/ 9500.
Personally I and Martin are investing in the AHL non capital guaranteed Man fund which has performed well in 2008- attached is the fund performance.This has not been hurt by the drop in the AUD - Minimum investment in this RM 62,500 and there are no exit charges.
It seems the more and bigger financial disasters the better Man performs. Perhaps Dante would have invested in Man had they offered the fund in his day.
The Man capital guaranteed fund was affected due to the drop in the AUD but managed to hold steady due to the fine performance of AHL, the driver of the fund. The AUD has recovered a good part of its losses versus the RM and it has the potential to beat almost all investments in 2009.
Have a good week
Bill
Dante Aligheri, an Italian poet of the 13th Century wrote the masterpiece Divine Comedy, an epic tale about hell, purgatory, and heaven. Hell is described as the living place of Satan, devils and wicked souls, all condemed to eternal punishment after death; a place of pain and torment. At the entrance of hell is a sign, "Abandon hope, all ye who enter here."
It certailly feels like Dante's inferno on Wall St these days amid the worst economic times since the great depression of 1930. The global economy is reeling from the sub-prime mortage meltdown that has infected the entire financial system. shaking investor confidence and breeding deep mistrust. The fraud scandle engineered by Bernie Madoff, fund manager, stealing billions of dollars in a pyramid scheme has only made matters worse.
Global Money Trends 16 Jan 09
This cartoon drawn 15 years ago by Bill Watterson sums up what happened. He saw it coming ! One of our recent graduates forwarded this: If you have anything useful to share please forward to me. I really thank the gentleman who contributed this
My advice: lighten up on all your long US share positions on a run towards Dow 9000 which may happen on the short term euphoria of Obama who is characterized as the 2nd coming of Christ. When people see Obama is not Christ expect the Dow to collapse. YOu may purchase on the NYSE LQD the ETF dealing in high grade corporate bonds and at the same time short sell TLT the 20 year government bond ETF.
Currently the spread is trading at 16 and should narrow to 6 in weeks ahead. US Treasury bonds are topping out on lack of demand narrow range bars ( Who wants a return of only 2.1 % on a 20 year bond ?) while high grade corporate bonds are performing well as a safe haven. The interest rate for this fund is over 5.8% with a chance of a handsome capital gain. The downside of this spread trade is limited unless the sun fails to rise tomorrow morning- a nuclear attack or a comet hitting the earth. I am joking: if the spread widens to 22 cut the position.
A spread is safer than an outright long position on the LQD should we have another major bank collapse or financial disaster.
The same goes for the KLSE deal in non cyclicals such as food/ beverages/ plantation companies/ tobacco/telcom/ power- even if the economy slows people still have to eat, use electricity, hand phones, internet and smoke. Avoid banks, small caps, speculative shares- it is OK to trade for quick profits but make sure you have a written trading plan with a clear exit strategy win or lose and have the discipline to execute.
Obama favors green/alternative energy, bio fuel. He unlike George Bush is not in the pocket of the oil companies and he said he will support bio- diesel and that should favor plantation companies. Only play the solid fundamental well managed cash rich companies but be ready to take your profits when the Obama mania wears off- perhaps when the KLSE approaches 1000/ 1200 and Dow at 9000/ 9500.
Personally I and Martin are investing in the AHL non capital guaranteed Man fund which has performed well in 2008- attached is the fund performance.This has not been hurt by the drop in the AUD - Minimum investment in this RM 62,500 and there are no exit charges.
It seems the more and bigger financial disasters the better Man performs. Perhaps Dante would have invested in Man had they offered the fund in his day.
The Man capital guaranteed fund was affected due to the drop in the AUD but managed to hold steady due to the fine performance of AHL, the driver of the fund. The AUD has recovered a good part of its losses versus the RM and it has the potential to beat almost all investments in 2009.
Have a good week
Bill
9:39 am - KLCI continue to move sideway for today !
DJIA is closed tonite due to holiday, so limited action today !
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