All that glitters…

Unfortunately I haven’t had time to post very much this week due to work commitments again, although I did manage to find time to sneak a little quiet dinner with Miss Dirty Dog and pop that the famous question.  (Yes my friends! Dirty Dog is about to become a husband! And he has been celebrating all week….)

But I will leave with just a quick observation: that rising in oil and commodity prices have coincided with the upcoming holiday period and weakness in the equity markets. These three factors are enough to keep me from adding on to any more positions for now, except for oil (just bought into the USO ETF tonite).  Usually at the end of the year the big money put their feet up, count all the profits they have made in the year and go on vacation. Those who are still in the market tend to be scalpers or drinking in the last chance saloon.  And that is when the sharks come out to play.

Company View: Public Bank and Litrak

Not much to report this week except for these two reports on Public Bank and Litrak which offer pretty succinct reasons for why these are considered good, safe ones to have in your portfolio.

More on Litrak (updated on 03-12-06)

I would just like to add a few words about this counter. Normally I would not consider investing in something like this because inherently it is not a well-managed company. If you look at its turnover you will see that in the last five years it has increased from 155 million to 242 million whilst its net profits have actually fallen from 101 million to 79 million. However it is considered a good company because of its low gearing, strong balance sheet, fairly predictable earnings and low capex. Due to the upcoming toll hikes, analysts predict that turnover will also increase and have revalued the stock to between 3.75 to 4.20. However given that the company has not managed to demonstrate its ability to translate increased earnings into net profits, I believe that the market may discount this. Still, at three dollars I believe it has some way to run.

Malaysian Equity: Maxis

I’ve posted a report on Maxis here. This is an index heavyweight and should form part of the universe of stocks under constant review. As a blue chip this isn’t a prime candidate for short term trading, but rather one which should be bought on weakness and averaged down over a long period to bring down your cost base. Some of the trade setups I would look for to achieve this is to wait for RSIs to drop to 30 or even 20 or maybe look for bottoming chart patterns on the weekly graphs (such as cup and handle formation) and I would not deploy any breakout strategies.

Trading: Portfolio Allocation

There’s quite a lot of buzz on the blogosphere on Morgan Stanley’s new quarterly research report on ETFs. For those who are truly serious about investing, it is essential that you read this and are aware of their core portfolio allocation rules. The next thing to do is open a brokerage account for the US and then implement your international portfolio. Because that’s how the world really runs.

Music Review: Squarepusher – Hello Everything

It has been quite a while since I have done an album review. That hasn’t been because I have not been listening to any music. It’s because I haven’t heard anything worth reviewing. I’m not one of those people who review something and then say it’s rubbish and give it 2/5 star like most of our newspapers. I mean, people read your stuff to know what is out there that is good and if you review something bad and then tell your reader not buy it then you may as well not have reviewed it in the first place. Now there are a lot of people who don’t agree with this but it works for me. I have too little time in the day to review bad music.

So here it is. Squarepusher’s new album – Hello Everything.

This guy is from England (where the world’s most innovative electronic musicians come from – no question) and has a background as a bass guitarist. However you couldn’t tell that from his solo stuff, which displays an extraordinary talent and flair for pushing electronic sounds and arrangements to the cutting edge. In fact it’s so technically accomplished that listening to him is sometimes quite similar to watching finalist DMC DJs. You can see that they are extremely talented and doing something amazing but you have no idea what the hell is going on as their never ending tricks cover you in a forever changing morass of sounds. Fortunately Hello Everything is also one of Squarepusher’s more accessible albums which stretches across several sub genres from retro computer game casio-style songs to straightforward jazz numbers where you get to hear him perform unadulterated virtuosic bass guitar. There’s also a whole song consisting of only one sound which drones and morphs for several minutes (and scared my fiancee, heh heh). However unmistakable are his signature street-style chords. Click here to see a clip of this remarkable musician in action. I give this album 4/5 and a cool factor of 9.5/10.

Trading: Mid caps for 2007

There’s no reason why any business would need a helpful government in order to succeed. All it needs is a level playing field. This goes for people’s careers, love lives, and yes, even their trading. Unfortunately this is not happening in Malaysia, which is why stock market punters are so fixated by what the government and its cronies are doing. It seems that to be a good trader in Malaysia you have to first qualify as a political commentator for CNN, and very few trading discussions these days can avoid descending into  speculation on what our friends “up there” are doing or thinking.

I will leave you to determine whether any of the counters in this report suffer from that affliction, or whether they do indeed represent true value.

Trading: Portfolio Review – What to do, not where it goes…

It has been a while since I have done this because I have hardly traded in the last couple of months. This is partly because I am a bear at these levels but it’s also because, being in it for the long haul, I don’t see the need to constantly trade as long as money is being made.

Anyway, as you can see, I am up around 7% from March compared to the 9% enjoyed by the KLSE.  And this is despite me not putting enough money to work and being a bear. This is because I believe in systems. A system removes all emotion from your trade and breaks things down methodically so that you act when the time is right and not when you feel it is right. It is a little bit like having a well organised football team. It doesn’t matter which team or country or stadium you play in, your good football team is well trained and well organised enough to do what is right to give it the best chance of winning under any circumstance. That doesn’t mean that I do not read editorials or other blogs to get an idea of what people think is going to happen. But that’s a job for economists and analysts. Not traders. Like I always say:

Don’t spend too much time thinking about where the market is going. Spend time thinking about what you are going to do if the market goes there.

Happy Trading!

Gratuitous Food Pic – Bán té!

Trading: IJM

Sorry I have not been posting. Work caught up with me again (as well as a long weekend break). But I did find time to buy into IJM. This is a good stock which I have been eyeing up for a few months and the signal came when the price did not break down despite it being sold off on heavy volume.

Investment Basics: Lessons 3 – Constructing a Core Portfolio

In Lesson 1 we talked about asset allocation and in Lesson 2 we talked about keeping costs down. Now we zoom into a portion of our asset portfolio which should consist of long term blue chip stocks. This is what I call the core portfolio. There is no magic in selecting these. You are looking for a good balance sheet, cashflow, and experienced management, and your horizons should be about a year at least. If your short term stocks can beat the performance of these blue chips year in and year out, then you can congratulate yourself on being able to beat the market. This is something which 80% of all professional fund managers fail to do, which is why in the long run you are probably better off with a buy and hold strategy of large caps, so remember to devote a portion of your money to names.

Here is what our favourite analysts think you should be holding for 2007. Note that there are a dozen more which should be added to this list, but I’ll leave you to find out which!