Warren Buffett's shareholder letters reveal he's a good sport with lowlights
(OMAHA, Nebraska) The Oracle of Omaha earned his nickname - and more than a few billion dollars - by spotting investments that others overlooked, but Warren Buffett makes mistakes.
No, really, he does.
Just pick through Mr Buffett's annual letters to shareholders of his conglomerate, Berkshire Hathaway. His pronouncements are eagerly anticipated by investors around the world. But sometimes even the Oracle gets it wrong. By the second page of this year's letter, released Saturday, Mr Buffett was borrowing a tennis term to take credit for 'a major unforced error' he'd made on some Texas utility bonds.
Of course, Mr Buffett's shareholder letters are filled with a lot more good decisions than bad ones. His US$44 billion fortune attests to that. But the blunders are instructive. Or at least remind us that he's human.
The plainspoken, no-nonsense investor tends to be a good sport about his mistakes. Here are some of the lowlights.
The blunder: Mr Buffett predicted in last year's letter that the US housing recovery would begin within the next year and help fuel economic growth.
The explanation: Mr Buffett doesn't mince words and says he was 'dead wrong' about this one. But he says basic biology makes it unavoidable that the country will need more houses.
The quip: 'People may postpone hitching up during uncertain times, but eventually hormones take over. And while 'doubling up' may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure.'
The blunder: Mr Buffett spent about US$2 billion buying bonds offered by Texas utility Energy Future Holdings. But those bonds are now worth about US$878 million, and he conceded Saturday that even that could be wiped out.
The explanation: Mr Buffett comes right out and admits misjudging the company's prospects and the likelihood that natural gas prices would remain depressed.
The quip: 'However things turn out, I totally miscalculated the gain/loss probabilities when I purchased the bonds. In tennis parlance, this was a major unforced error by your chairman.'
The blunder: Some of the companies Berkshire Hathaway has bought don't add much to the company's bottom line. Mr Buffett didn't single out the laggards in Berkshire's manufacturing, service and retail unit, but he acknowledged that a few produce poor returns.
The explanation: Mr Buffett says he misjudged some of these businesses before Berkshire bought them partly because he didn't always listen to curmudgeonly vice-chairman Charlie Munger.
The quip: 'I try to look out 10 or 20 years when making an acquisition, but sometimes my eyesight has been poor. Charlie's has been better; he voted 'no' more than 'present' on several of my errant purchases.'
The blunder: In 2008, Mr Buffett more than quadrupled Berkshire's stake in ConocoPhillips when oil and gas prices were near their peak. It cost the company several billion dollars.
The explanation: Mr Buffett said he didn't anticipate the dramatic fall in energy prices that happened later in 2008.
The quip: 'During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt.'
The blunder: Mr Buffett has said that buying Berkshire Hathaway itself may have been his worst investment decision. It was a struggling New England textile mill when he bought into it in the 1960s. He kept the mill running for 20 years before shutting it down.
The explanation: Mr Buffett didn't recognize immediately that the textile business was doomed to continue losing money.
The quip: 'The dumbest thing I could have done was to pursue 'opportunities' to improve and expand the existing textile operation - so for years that's exactly what I did,' he said last year. 'And then, in a final burst of brilliance, I went out and bought another textile company. Aaaaaaargh! Eventually I came to my senses, heading first into insurance and then into other industries.' - AP
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
(TZ - When Buffet got buffeted, he admits. His followers are perfect....none made mistakes. ^^^ @@@ ^^^)
John Maynard Keynes
Monday, February 27, 2012
Saturday, February 25, 2012
Tuesday, February 21, 2012
US dollar funding drying up in Asia - Business Times - 21 Feb 2012
Costs of foreign currency loans expected to stay high as US, European banks stay away from region
(HONG KONG) In a world awash with cheap cash from major central banks, it may seem ironic that companies in the top emerging market growth hotspot cannot get their hands on reasonably priced bank loans.
But Asia's credit landscape has changed dramatically over the past year and January provided the strongest evidence to date, with dollar lending by banks virtually non-existent except for the most pristine names - and at very rich prices.
Borrowers rushed into the more fickle and demanding bond markets, catching investors early in the year but still paying through their nose for the cash.
The flurry included eight top-tier Hong Kong-based companies that hit debt markets with a record US$8 billion worth of dollar bonds in January.
'There's never been a period with such a level of activity from Hong Kong corporates in the bond market. It's unprecedented,' said Anthony Arnaudy, head of debt capital markets for North-east Asia at Standard Chartered Bank.
Hong Kong property developer Nan Fung International Holdings was a first time bond issuer in January, as was property firm Wheelock.
Spreads widened and yields soared. Bond issuers in Hong Kong paid a mark-up of as much as four percentage points above US debt yields to secure five-year funds, about 10 times more than they did in 2007 before the US subprime crisis.
The risk, say bankers, is now of a long-term jump in funding costs in the region as US and European banks stay away.
At first glance what has been happening in Asian credit markets might seem incongruous. On the one hand, the Federal Reserve and European Central Bank have pumped cheap dollars and euros into the financial system to support their faltering economies. US rates are set to stay near zero for at least two more years.
And yet corporates in fast-growing Asia are not able to get banks to lend them dollars or euros. This had not happened before. Not in 2009, and certainly not in any of the previous episodes when financial markets were this liquid.
But the past year has been different. The easiest carry trade in global markets has been disrupted by trussed up bank balance-sheets, the stringency of Basel III capital requirements and, most of all, the drawn out European debt crisis.
It's not the best time to be seeking foreign currency loans, yet there's potentially huge demand. At least US$14 billion of dollar, euro and Hong Kong dollar denominated loans are scheduled to mature this year and might come up for refinancing.
And borrowers are sensing the terrain is not going to shift in their favour anytime soon. Hong Kong's Nan Fung returned quickly to the dollar bond market with another issue this month, paying 5.15 per cent for five-year debt.
Changing game
Others too, have been adapting to the changing game. Singapore's MMI holdings decided to replace its loan with a bond, India's Power Finance Corporation had to cut the tenor on a loan proposal, and Hong Kong's IFC Development both cut its bond offering by more than a third and upped its yield.
Forced by the turn in the credit cycle, borrowers have sought out alternate sources of funding, shifting to more liquid markets in Singapore or Japan.
Henderson Land, for instance, issued a S$200 million five-year bond in Singapore late last year, while Cheung Kong Holdings, controlled by billionaire Li Ka-shing, also raised its bond offerings in the city-state.
Even so, loan volumes have collapsed. Across Asia, there were 28 deals totalling US$3.4 billion in January 2012, a tiny fraction of the 63 deals worth US$19.5 billion in January 2011.
That is worrisome, given the mountain of loans to be refinanced in Asia this year. Australia has about US$53 billion maturing this year, Hong Kong has US$26 billion and Singapore has US$17 billion, according to Thomson Reuters data.
'Even with the monetary easing, some banks are trying to preserve capital, which will have an effect on loan pricing,'said Benjamin Ng, head of Asia syndicate and acquisition finance at Citigroup.
One fear is that European banks, traditionally the biggest providers of foreign funding in Asia, will continue deleveraging. Analysts at Morgan Stanley estimate European banks, excluding British ones, have claims of about US$680 billion on Asia.
No one is quite sure how much of that cash has left the region in 2011, but one thing is certain: these banks are not committing new funds to Asia. And the billions of euros the European authorities are injecting into their banking systems are simply being recycled into safe deposits at the ECB and government debt.
'Not surprisingly, pricing on Asian loans has not budged much and the higher pricing is here to stay for some time to come,' said Birendra Baid, head of loan syndication, Asia-Pacific at Deutsche Bank.
Local banks, such as Singapore's DBS and India's ICICI Bank, have sensed there are rich pickings among the assets the Europeans are offloading.
The problem though is that the foreign currency part of their balance sheets is already stretched, and Basel III will require them to be even more prudent about managing risk and liquidity.
Foreign currency loan growth at most Asian banks has hit the 40-70 per cent annual pace, Morgan Stanley estimates, which means their lending in dollars has been far faster than the 15-20 per cent average rise in overall credit.
Moreover, dollar deposit growth has not kept pace, which has meant the ratio of dollar loans to deposits is upwards of an unhealthy 100 per cent for most Asian banks, particularly those in South Korea and Thailand.
In Korea for instance, savings banks, which are big non-banking lenders in the economy, deposited US$5 billion with their local lobby group late last year, preferring low yields over any exposure to risk.
'I don't think it is a crisis by any stretch,' said Viktor Hjort, head of Asian credit strategy at Morgan Stanley. 'What you have though is a situation where over the past two years Asia's grown used to there being this very generous and very cheap access to dollar funding by Asian banks.
'That's now much more constrained because lending has already expanded aggressively over the last few years and the European banks, historical providers of cheap wholesale funding, are pulling out.'
The implications are two-fold. One is the risk that Asian banks join the issuance queue aggressively, going on a dollar-funding binge as they try to cherry-pick assets and expand balance sheets - what Morgan Stanley terms the 'dollarisation' of Asian banks.
Australia's Macquarie Bank kicked off that country's yankee bond issuance for 2012 this week, offering 420 basis points over US Treasury yields for a five-year US dollar bond.
The other risk is a more permanent jump in funding costs for Asia, at least until the US and European banks are able to come back into the emerging market wholesale lending business.
Even though private banks and funds have stepped into the space vacated by the banks, Asia's funding needs are growing.
Worrying trend
There has already been a marked jump in borrowing costs. And a simultaneous and worrying trend of banks invoking 'market disruption clauses' to increase pricing on pre-committed loans to better reflect the rise in their own cost of funds.
One interesting example is the refinancing by the top-tier IFC Development Ltd in Hong Kong, which owns the building of the same name in the city's business district. It initially wanted to borrow HK$17 billion (S$2.75 billion), but had to slash it by 71 per cent to HK$5 billion, hit by the liquidity squeeze. It also had to lift the pricing by about 20 per cent to attract more lenders.
Hong Kong-based Kerry Properties is currently offering 230 basis points for a HK$2.4 billion three-year loan, 70 per cent or 135 bps higher than it paid on a five-year loan in January 2011.
Loan pricing in Hong Kong needs to be at least 200 basis points over Hibor, even for top rated companies, according to several loan bankers. This is almost double what was being offered about a year ago.
The all-inclusive pricing for a five-year loan for a BBB rated borrower in Australia is close to 300 bps, a jump of 100 bps since November.
Simon Milne, treasury consultant at iSelect, an Australian insurance broker, said borrowers were facing the most difficult market conditions he has ever seen.
Mr Milne, who has more than 20 years experience in the Australian debt markets, including four as treasurer of gaming company Crown Ltd, says top-tier firms are still able to get loans at competitive rates. It's the mid-range corporates that are struggling. 'The risk of pulling a deal has increased,' he said.
Across in India, the Export-Import Bank of India, a frequent borrower in offshore loan markets with a good following given its status as a wholly state-owned borrower, is borrowing up to US$250 million for three years, paying an all-inclusive charge of 250 bps over Libor. That is nearly double the 140 bps over Libor that it paid on a US$150 million three-year loan in March 2011. -- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
(HONG KONG) In a world awash with cheap cash from major central banks, it may seem ironic that companies in the top emerging market growth hotspot cannot get their hands on reasonably priced bank loans.
But Asia's credit landscape has changed dramatically over the past year and January provided the strongest evidence to date, with dollar lending by banks virtually non-existent except for the most pristine names - and at very rich prices.
Borrowers rushed into the more fickle and demanding bond markets, catching investors early in the year but still paying through their nose for the cash.
The flurry included eight top-tier Hong Kong-based companies that hit debt markets with a record US$8 billion worth of dollar bonds in January.
'There's never been a period with such a level of activity from Hong Kong corporates in the bond market. It's unprecedented,' said Anthony Arnaudy, head of debt capital markets for North-east Asia at Standard Chartered Bank.
Hong Kong property developer Nan Fung International Holdings was a first time bond issuer in January, as was property firm Wheelock.
Spreads widened and yields soared. Bond issuers in Hong Kong paid a mark-up of as much as four percentage points above US debt yields to secure five-year funds, about 10 times more than they did in 2007 before the US subprime crisis.
The risk, say bankers, is now of a long-term jump in funding costs in the region as US and European banks stay away.
At first glance what has been happening in Asian credit markets might seem incongruous. On the one hand, the Federal Reserve and European Central Bank have pumped cheap dollars and euros into the financial system to support their faltering economies. US rates are set to stay near zero for at least two more years.
And yet corporates in fast-growing Asia are not able to get banks to lend them dollars or euros. This had not happened before. Not in 2009, and certainly not in any of the previous episodes when financial markets were this liquid.
But the past year has been different. The easiest carry trade in global markets has been disrupted by trussed up bank balance-sheets, the stringency of Basel III capital requirements and, most of all, the drawn out European debt crisis.
It's not the best time to be seeking foreign currency loans, yet there's potentially huge demand. At least US$14 billion of dollar, euro and Hong Kong dollar denominated loans are scheduled to mature this year and might come up for refinancing.
And borrowers are sensing the terrain is not going to shift in their favour anytime soon. Hong Kong's Nan Fung returned quickly to the dollar bond market with another issue this month, paying 5.15 per cent for five-year debt.
Changing game
Others too, have been adapting to the changing game. Singapore's MMI holdings decided to replace its loan with a bond, India's Power Finance Corporation had to cut the tenor on a loan proposal, and Hong Kong's IFC Development both cut its bond offering by more than a third and upped its yield.
Forced by the turn in the credit cycle, borrowers have sought out alternate sources of funding, shifting to more liquid markets in Singapore or Japan.
Henderson Land, for instance, issued a S$200 million five-year bond in Singapore late last year, while Cheung Kong Holdings, controlled by billionaire Li Ka-shing, also raised its bond offerings in the city-state.
Even so, loan volumes have collapsed. Across Asia, there were 28 deals totalling US$3.4 billion in January 2012, a tiny fraction of the 63 deals worth US$19.5 billion in January 2011.
That is worrisome, given the mountain of loans to be refinanced in Asia this year. Australia has about US$53 billion maturing this year, Hong Kong has US$26 billion and Singapore has US$17 billion, according to Thomson Reuters data.
'Even with the monetary easing, some banks are trying to preserve capital, which will have an effect on loan pricing,'said Benjamin Ng, head of Asia syndicate and acquisition finance at Citigroup.
One fear is that European banks, traditionally the biggest providers of foreign funding in Asia, will continue deleveraging. Analysts at Morgan Stanley estimate European banks, excluding British ones, have claims of about US$680 billion on Asia.
No one is quite sure how much of that cash has left the region in 2011, but one thing is certain: these banks are not committing new funds to Asia. And the billions of euros the European authorities are injecting into their banking systems are simply being recycled into safe deposits at the ECB and government debt.
'Not surprisingly, pricing on Asian loans has not budged much and the higher pricing is here to stay for some time to come,' said Birendra Baid, head of loan syndication, Asia-Pacific at Deutsche Bank.
Local banks, such as Singapore's DBS and India's ICICI Bank, have sensed there are rich pickings among the assets the Europeans are offloading.
The problem though is that the foreign currency part of their balance sheets is already stretched, and Basel III will require them to be even more prudent about managing risk and liquidity.
Foreign currency loan growth at most Asian banks has hit the 40-70 per cent annual pace, Morgan Stanley estimates, which means their lending in dollars has been far faster than the 15-20 per cent average rise in overall credit.
Moreover, dollar deposit growth has not kept pace, which has meant the ratio of dollar loans to deposits is upwards of an unhealthy 100 per cent for most Asian banks, particularly those in South Korea and Thailand.
In Korea for instance, savings banks, which are big non-banking lenders in the economy, deposited US$5 billion with their local lobby group late last year, preferring low yields over any exposure to risk.
'I don't think it is a crisis by any stretch,' said Viktor Hjort, head of Asian credit strategy at Morgan Stanley. 'What you have though is a situation where over the past two years Asia's grown used to there being this very generous and very cheap access to dollar funding by Asian banks.
'That's now much more constrained because lending has already expanded aggressively over the last few years and the European banks, historical providers of cheap wholesale funding, are pulling out.'
The implications are two-fold. One is the risk that Asian banks join the issuance queue aggressively, going on a dollar-funding binge as they try to cherry-pick assets and expand balance sheets - what Morgan Stanley terms the 'dollarisation' of Asian banks.
Australia's Macquarie Bank kicked off that country's yankee bond issuance for 2012 this week, offering 420 basis points over US Treasury yields for a five-year US dollar bond.
The other risk is a more permanent jump in funding costs for Asia, at least until the US and European banks are able to come back into the emerging market wholesale lending business.
Even though private banks and funds have stepped into the space vacated by the banks, Asia's funding needs are growing.
Worrying trend
There has already been a marked jump in borrowing costs. And a simultaneous and worrying trend of banks invoking 'market disruption clauses' to increase pricing on pre-committed loans to better reflect the rise in their own cost of funds.
One interesting example is the refinancing by the top-tier IFC Development Ltd in Hong Kong, which owns the building of the same name in the city's business district. It initially wanted to borrow HK$17 billion (S$2.75 billion), but had to slash it by 71 per cent to HK$5 billion, hit by the liquidity squeeze. It also had to lift the pricing by about 20 per cent to attract more lenders.
Hong Kong-based Kerry Properties is currently offering 230 basis points for a HK$2.4 billion three-year loan, 70 per cent or 135 bps higher than it paid on a five-year loan in January 2011.
Loan pricing in Hong Kong needs to be at least 200 basis points over Hibor, even for top rated companies, according to several loan bankers. This is almost double what was being offered about a year ago.
The all-inclusive pricing for a five-year loan for a BBB rated borrower in Australia is close to 300 bps, a jump of 100 bps since November.
Simon Milne, treasury consultant at iSelect, an Australian insurance broker, said borrowers were facing the most difficult market conditions he has ever seen.
Mr Milne, who has more than 20 years experience in the Australian debt markets, including four as treasurer of gaming company Crown Ltd, says top-tier firms are still able to get loans at competitive rates. It's the mid-range corporates that are struggling. 'The risk of pulling a deal has increased,' he said.
Across in India, the Export-Import Bank of India, a frequent borrower in offshore loan markets with a good following given its status as a wholly state-owned borrower, is borrowing up to US$250 million for three years, paying an all-inclusive charge of 250 bps over Libor. That is nearly double the 140 bps over Libor that it paid on a US$150 million three-year loan in March 2011. -- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Tuesday, February 14, 2012
Efficient Market Hypothesis - Law or Hypothesis?
http://en.wikipedia.org/wiki/Efficient-market_hypothesis
Back in 1987 when I was pursuing my MBA, I was introduced to EMH lectured by Jerome Haas and Harold Bierman. For exam sake to pass the Corporate Finance subject who care what it is all about. Just answer the question you will be given grades. This is the easy part.
Next come Behavioral Decision Theory taught by Richard (Dick) Thaler. Dick who has a PhD Economics "switched" from "fundamental" camp to "behavioral" camp. Dick and his cohorts believe that human behavior dictates decision and choices are never perfect. What that means is MARKET IS NEVER EFFICIENT. IF market is never efficient that means you can exploit such opportunities. Who cares what he thinks! Just remember what he taught in class and go answer the questions in the exam.
By the time I was totally soaked in the financial markets in 1992 onwards, Dick Thaler lectures started to flash in my mind after experiencing series of wild swing. IF market is "very" efficient, why the wild swing? I have done my stereotype fundamental financial analysis....the list is longer than my weekly grocery checklists.
IF the fundamental financial grocery checklist can't explain and pinpoint when this wild swing and why happen, something is just not right! IF YOU HAVE A BIT OF COMMON SENSE TO THINK.
If checklist is fool-proof than there should not be anymore stocks to invest. They should be fully priced! Everyone who follow the check list like Holy Grail should be richer than Buffet. Buffet can make some bad investment following the grocery checklist, a few companies went kaput despite Buffet believing they are "good". Whatever that means! Buffet is no god either!
That started my journey to revolutionize my personal trading-investing-punting-smart calculated gambling technique. Despite the term INVESTMENT coined by the academic which sounds dam blardy noble and high class, it is nothing but another MARKETING GIMMICK. Now the best part is some blardy idiot will come and tell you I am using INVESTMENT TECHNIQUE OR ANALYSIS (aka grocery checklist). Sound so big...sound so great...classic Marketing.
After 20 years enjoying myself in the market and my regular idea exchanges to with the Finance Academic in USA, more and more people in the academic are starting to challenge the old school. But you can't remove the old school completely. Otherwise many people will register for unemployment benefits. Now this is going to dent the improving employment rate in USA.
Let us see over the next 10 years how the dogmatic stereotype live in the financial markets!
Back in 1987 when I was pursuing my MBA, I was introduced to EMH lectured by Jerome Haas and Harold Bierman. For exam sake to pass the Corporate Finance subject who care what it is all about. Just answer the question you will be given grades. This is the easy part.
Next come Behavioral Decision Theory taught by Richard (Dick) Thaler. Dick who has a PhD Economics "switched" from "fundamental" camp to "behavioral" camp. Dick and his cohorts believe that human behavior dictates decision and choices are never perfect. What that means is MARKET IS NEVER EFFICIENT. IF market is never efficient that means you can exploit such opportunities. Who cares what he thinks! Just remember what he taught in class and go answer the questions in the exam.
By the time I was totally soaked in the financial markets in 1992 onwards, Dick Thaler lectures started to flash in my mind after experiencing series of wild swing. IF market is "very" efficient, why the wild swing? I have done my stereotype fundamental financial analysis....the list is longer than my weekly grocery checklists.
IF the fundamental financial grocery checklist can't explain and pinpoint when this wild swing and why happen, something is just not right! IF YOU HAVE A BIT OF COMMON SENSE TO THINK.
If checklist is fool-proof than there should not be anymore stocks to invest. They should be fully priced! Everyone who follow the check list like Holy Grail should be richer than Buffet. Buffet can make some bad investment following the grocery checklist, a few companies went kaput despite Buffet believing they are "good". Whatever that means! Buffet is no god either!
That started my journey to revolutionize my personal trading-investing-punting-smart calculated gambling technique. Despite the term INVESTMENT coined by the academic which sounds dam blardy noble and high class, it is nothing but another MARKETING GIMMICK. Now the best part is some blardy idiot will come and tell you I am using INVESTMENT TECHNIQUE OR ANALYSIS (aka grocery checklist). Sound so big...sound so great...classic Marketing.
After 20 years enjoying myself in the market and my regular idea exchanges to with the Finance Academic in USA, more and more people in the academic are starting to challenge the old school. But you can't remove the old school completely. Otherwise many people will register for unemployment benefits. Now this is going to dent the improving employment rate in USA.
Let us see over the next 10 years how the dogmatic stereotype live in the financial markets!
Monday, February 13, 2012
Free Chart - Singapore stocks
What are my favorite Singapore listed stocks? They are all above. I have the ST Index and SIMSCI(STI Futures) to track.
First let me assure you that I do not know who the shareholders, earning, free float....blah blah blah...
What I do know is that some of them are ST index linked stocks. When they are in my opinion after a glance at the charts seems priced attractively, I go and buy some.
The other thing I do know is what business they are running. Not exactly like I can defined per wikipedia but a rough idea only. Just rough idea. The only one that I have been trading for long time is NOL since 1995.
Don't send me an email what I think of these stocks because I never bother to check the details for the last 16 years.
As long as they are considered within the index linked and not in fashionable consumer products, I will consider.
Yes, every stock has its own cycle. There is a time to buy and a time to sell.
I have never and I do not think I will ever buy a stock (some like the noble egoistic word invest) just for dividend payout. I buy a stock for capital gain. Now you want to call that punting, or trading is IRRELEVANT.
When you buy and sell something it is call TRADING. When buy and sell something without the faintest idea what you are buying that is call GAMBLING ignorantly. When you and something considering your risk reward consideration that is call EDUCATED GAMBLING!
Now if after all your mumbo jumbo hocus pocus analysis tearing the company information apart you bought a stock which is supposed to go up but drop badly without any change to business, that is called FOOLISH GAMBLING. You take a gamble and you lost!
ALWAYS REMEMBER WHEN YOU HAVE TO MAKE A CHOICE, IT IS A GAMBLE. WE DO NOT DETERMINE THE OUTCOME and WE DO NOT CONTROL THE OUTCOME. THIS IS GAMBLING AND LET US FACE IT HONESTLY. HEAD YOU WIN ...TAIL U LOOSE!
Sunday, February 12, 2012
How much does an MBA from Cornell cost per annum?
http://www.johnson.cornell.edu/About.aspx
It is true education is your best investment. If I were to compared the cost of education back in 1987-89 when I was completing my MBA, it cost me about US$20,000,00 per anumm. Today the cost has escalated slightly more than 3x after 21 years!!!
How many Malaysians can afford to pay through their noses to get an MBA from Ivy League Uni? Finishing my Bachelors Degree in Agriculture Science from UPM and pursuing my MBA in Cornell was more than an experience. It was an EYE OPENER.
There I encountered the really SMART ASSES and they are the quiet ones. When they opened their mouth, it was a STATEMENT.
When I read, hear or see "bloggers" yacking away trying to teach or tell others the difference between INVESTING-TRADING-PUNTING.....FUNDAMENTAL-TECHNICAL....SET OF BIBLICAL RULES OF KNOWLEDGE, I wonder which school they graduated with their financial degrees?
DO you think you need to know all the traffic laws and by-laws before you are qualified to take your driving test? All you need to do is to know the general traffic laws, do and don't plus don't forget COMMON sense.
Do you think you need to know what materials are use to make the car before you drive the car to confirm it does not melt like ice-cream in the sun?
IF there is one thing I learned over 20 years in the market, keep to a few set of simple rules that you understand and can implement to make money consistently.
Do you know that there are more millionaires without a proper academic degree than more university graduates that are employees? Do you know many of these millionaire are keeping very low profiles?
Education is to help and assist us with making decisions. It is not to bog us down with more set of rules. How can you differentiate an entrepreneur versus a non-entrepreneur? ONE that open the checklists and the other count the fingers DOING SIMPLE CALCULATED RISKS!!!!
Do you think I have time to check all the nitty gritty information or facts when I trade an average of 300-500 contracts monthly on the CBOT?
Now that is business. I only have a few simple rules to follow. Like a Captain on the ship deck navigating the channel. I just need to know the bearing and the focal point. The rest is irrelevant. Forget if there are whales or crocodiles in the water. Just make sure the water has sufficient draft to clear. Who care if the water is dirty or contaminated. Just make sure there is water for the ship to float!
The more others try to impress you with the academic knowledge or financial knowledge, the more foolishly idiotic they look. I have seen and I know friends who are millionaires and consistently take money from the market without the sets of bullshits financial information. If they can do it for 20 years or more since they are older than me when I got to know them, they must be doing something right. The only way is to study their attack and retreat patterns.
LET ME ASSURE YOU OVERTIME I HAVE SLOWLY UNWIND AND FORGET MY ACADEMIC FINANCIAL KNOWLEDGE AS I TAKE THOSE POSITIONS IN CBOT and MANAGING NO LESS THAN USD10.0M FOREX TRADES. THE MORE I KNOW, THE WORST I PERFORM. THE MORE I IGNORE, THE BETTER I DELIVER.
FOLLOW BLINDLY or SMARTLY. IT IS YOUR CHOICE.
Financial market were studied by many people in the past, present and will be in the future. When the subject involves money and wealth, it will be of great interest to academic and non-academic people. Along the way con artist appears to swindle ignorant and greedy people disguising as gurus. The bigger the names and corporation the more credible they appear. Media is not helping either because media wants traffic or sales.
Some so-called gurus might have started with a genuine noble cause to share and educate. Somehow they lost their focus when fame and money clouded their mind and blinded their eyes. Some will merely repeat what the books tell you which is nothing new being a parrot plagiarism.
There is another group of gurus who will insist and predict market behaves according to their view backing it up with economic data. The truth is sometime market behaves they way these so-called guru said other times the market just acted opposite. Now the biggest egoist behavior is to beat the drums when market moves as said. Actually market moves independently ignoring what others are trumpeting. Market will continue to move whether you say something or don’t say anything. We are free to air our views. We are not entitled to tell market how to behave!!!! GET IT !!!
I transformed from looking for BUY-SELL signals to justify my trades! I will be asking:
WHY SHOULD I TAKE THIS TRADE?
WHAT IS THE RISK REWARD RATIO?
WHERE IS THIS TRADE POSITION VERSUS THE OVERALL BIG PICTURE?
IF I AM WRONG WHAT SHOULD I DO?
SHOULD I EXIT MY POSITION WITH A LOSS?
DO I HAVE THE PATIENCE TO RIDE OUT THE PAPER LOSS?
DO I NEED A STOP LOSS?
WHEN SHOULD I IGNORE A STOP LOSS?
There so many rules and proposition you can read from the media, books and classes. You can choose to accept them blindly or start to question each and every sentence. When do you apply and ignore them!!!!
FOLLOW BLINDLY or SMARTLY. IT IS YOUR CHOICE.
Weekend is the only time I am free to tok-kok! Weekdays too busy trading global financial markets.
May every week be another bountiful week.
Some so-called gurus might have started with a genuine noble cause to share and educate. Somehow they lost their focus when fame and money clouded their mind and blinded their eyes. Some will merely repeat what the books tell you which is nothing new being a parrot plagiarism.
There is another group of gurus who will insist and predict market behaves according to their view backing it up with economic data. The truth is sometime market behaves they way these so-called guru said other times the market just acted opposite. Now the biggest egoist behavior is to beat the drums when market moves as said. Actually market moves independently ignoring what others are trumpeting. Market will continue to move whether you say something or don’t say anything. We are free to air our views. We are not entitled to tell market how to behave!!!! GET IT !!!
I transformed from looking for BUY-SELL signals to justify my trades! I will be asking:
WHY SHOULD I TAKE THIS TRADE?
WHAT IS THE RISK REWARD RATIO?
WHERE IS THIS TRADE POSITION VERSUS THE OVERALL BIG PICTURE?
IF I AM WRONG WHAT SHOULD I DO?
SHOULD I EXIT MY POSITION WITH A LOSS?
DO I HAVE THE PATIENCE TO RIDE OUT THE PAPER LOSS?
DO I NEED A STOP LOSS?
WHEN SHOULD I IGNORE A STOP LOSS?
There so many rules and proposition you can read from the media, books and classes. You can choose to accept them blindly or start to question each and every sentence. When do you apply and ignore them!!!!
FOLLOW BLINDLY or SMARTLY. IT IS YOUR CHOICE.
Weekend is the only time I am free to tok-kok! Weekdays too busy trading global financial markets.
May every week be another bountiful week.
Market Bearing and Risk Rewards
My first exposure to Elliot Wave was in 1992-93. Elliot Wave was promoted as FORECASTING TOOL. For many years I accepted EW as a forecasting tool projecting targets for UP and DOWN moves. Well, to be fair the financial communities are very objective and realistic group of people. If the tool cannot provide specific target and dates or at least targets it is rendered useless.
After more than a decade of using and learning EW in 1994, I started to question the intent or the “macro” concept of this theory. This brought me to the next approach complimenting DOW THEORY. There are different sets of “rules” to Elliot Wave Theory and DOW Theory. There is no need to follow and set of rules rigidly. What is important is to distill the few rules that consistently appears and reliable instead of 12 rules! Go for quality and not quantity.
Many of the rules are not consistently reliable and I rather call them redundant. I can vouch that I NEVER USE VOLUME in my analysis and I am still in the market after 20 years. You can throw volume out of the window.
Elliot discussed about the 5 moves. I called them 1-3-5 (odd numbers) = UP and 2-4 (even numbers) = DOWN. Elliot talks about A-B-C down swing. I ignore this and maintain 2-4 as down move to be consistent. Who says we cannot amend and adapt the theory to suit our personality?
The key to Elliot Wave is the final (5) move. Will it be below Peak of (3) which I labeled (L)? Equal (S)? Higher (H)? IF you can solve this puzzle, you have crack one puzzle. The next puzzle is to solve is how do you know which ONE of the (A), (B) or (C) is going to happen? (A) = (5) is longest. (B) = (3) is the longest. (C) = (1) is the longest.
After you have solve this two puzzles of 1-2-3-4-5 moves irrespective (5) is below, equal or higher than Peak (3), you know there is a down swing coming. How do you know if this down move will completely retrace to (0) or (2) or (4) or somewhere in between these points? What if after the correction ends and new peak (7) that is not drawn is higher than (5) develops. Where do we go from here?
IF you are able to solve this these puzzles, you have the bearing of the market. You will be able to determine you risk rewards. You will be able to take calculated risks with optimum or maximum returns.
IF you do not understand the holistic concept of the theory, you will not be able to extract maximum opportunities. You are abusing the theory only to end up with losses and frustrations.
What good is projection and forecasting if you lost in the trend maze? Do you know where the current price is versus the overall macro trend? Do you know your risk reward ratio versus the overall trend? If you system or whatever you are using can’t answer these TWO simple questions, I suggest you stop trading or investing. Go back to the drawing board. Let me advise you that volume and candlesticks can’t answer these two questions. I have shortened the process for you.
Enjoy the discovery.
Saturday, February 11, 2012
DJIA - Free charts
This are the few free charts for this week.
Nothing new....only waiting for things to happen
Tuesday, February 7, 2012
DJIA
The bulls have charged all the way from 10500 to current level. Now we start to read the unemployment rate has improved. Why didn't ANALyst and FUNda manager beat their drums at 10500 that unemployment will improve?
Simply because they got no damn clue. But market got a clue and moving up and up and away. Most people are so pre-occupied with the bullshit news and analysis but don't have the guts to recommend BUY!
Now are these ANALyst going to recommend BUY after examine the anal! Go fly kite!
Friday, February 3, 2012
Wednesday, February 1, 2012
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