Bitcoin Boom Bust

Around a month ago, I wrote about the pros and cons of investing in Bitcoins - link here (yes, i am a Fool.sg contributor) :)

One of the key risks I talked about was about the overwhelming chances that it is can be used for fraud or manipulation - like a black market for money laundering.

True enough, just a month plus later, it is going down with one of the biggest exchange shutdown and its founder MIA. Here is the article...

One may wish to exercise caution when moving into such risky ventures; i remember hearing one celebrity buying almost 400K of Bitcoins back when i wrote the previous article. Hope he has cashed out his holdings! And you should too...!

Olam Stock Take on Blog

Recently, i done a Facebook Q&A to see what are the companies my readers are interested in. And Olam comes out as quite a hot favourite.

I shall touch on Olam now (sorry for the delay! Busy with some stuff recently...)

Fundamental:

Everyone should have known about the big impact of the Block's damaging report from Muddy Waters which led to a stock fall of nearly 20%, adding to the woes of a bad commodity cycle.

As for the recovery, Olam is issuing a big sum, US$750m, of 5 year Bonds which comes with "free" warrants.. trying to boost its war-chest. The cost of this debt is a whooping 13.7% according to the article by Michael Dee, saying that it sorts of instills the notion that what Brook was correct in saying that Olam is cash-poor and debt-intensive. 

If you wish to read the entire report, Like my Facebook Page and message me and i can send it to you :)

In the meanwhile, Olam is still continuing to acquire businesses using the expensive debt. It's like borrowing money at 13% annually and using the money to buy businesses. You have to get more than 13% return from the acquisitions to be yield-accretive - not really my cup of tea.

Technical

After hitting rock-bottom, Olam seems to be on a channel uptrend [see the 2 lines moving up]. On the longer term over a year period, the market seems to be in a descending triangle formation.

Thus, short-term traders can choose to take profit at $1.90 and set a stop-loss at the $1.50 mark established in June.

Conclusion:

I agree that confidence is boosted by the support of Temasek Holdings, which upped its stakes to 18% as one of the major shareholders. However, this bad news is not one which is temporary, it divulges real significant balance sheet problems for Olam - causing equity dilution in the future due to the issue of free warrants.

Furthermore, I have read reports on how 27% of net income comes from inflated biological gains. Therefore, personally, I would regard Olam as a short-term play. For longer-term wise, its better to go for Noble group or Wilmar which are more stable.

SGX Stocks to BUY

As STI hovers past 3,000 mark; many stocks are rising with the trend as well.

Today, i run through ALL the stocks and decided to show 3 stocks with potential for capital gains.
How i selected these 3 are based on the Criteria:

• Mid Cap (Already established yet have room for Growth)
• Good Technical Analysis (Rising with high volume after consolidation period)
• Share Buybacks (Meaning the company is confident in its future growth)

1) Noble Group

The chart shows the sudden out-burst in share price with an increase in volume after consolidating around the 1.05 to 1.08 range.

2) Ho Bee

As for Ho Bee, there is a spike in volume and share price together with the double bottom pattern.

3) Biosensors

Same thing, a hike in volume and breakthrough in the descending triangle pattern.

Most importantly, the companies all have share buy-backs or significant increase in shareholdings by major shareholders. It demonstrates confidence on how the stock will continue to perform next time. 

It's exactly like when i recommended a "call" for OSIM when it was heavily in the share-buyback mode during which its price was $1.10 - $1.20.

Hope you can Profit from these! HUAT AH!

Opportunities lie within US demise caused by Hurricane Sandy

New York suffered the worst hurricane in its 180 year history and left destruction everywhere... it is estimated that it will take a $20 billion toll on the city...

As for the impact on the stocks, hurricane sandy will offer opportunities both on the long and short sides.

Below links show you how to capitalize on the disaster to make some quick gains on your side.

• http://www.marketwatch.com/story/how-to-play-21-hurricane-stocks-2012-10-31
• http://www.foxbusiness.com/news/2012/10/30/home-depot-lowe-deploy-truckloads-post-storm-items/
• http://www.fool.com/investing/general/2012/10/30/video-3-hidden-gems-from-hurricane-sandy.aspx

I believe the same goes for the Japan earthquake that happened in 2011...

http://seekingalpha.com/article/258238-investment-opportunities-in-the-wake-of-japan-s-earthquake

Shorting the nuclear stocks proved very profitable... due to the nuclear radiation which spooked investors worldwide..

Comparison of Olam vs Wilmar

Recently, commodity stocks are in the limelight.. because it is continuously affected by the global turn of events...

I saw in hardwarezone that people are looking to buy into Wilmar.. and so i would like to give my second thoughts and compare Olam vs Wilmar...

WILMAR

Fundamentals

The cashflows, net profits are inconsistent and dividend yield is low at 1+% if you divide the dividend per share with the share price accordingly.

Another thing is the "Current Liabilities", which i highlighted up there. It's astonishing 11x of its Annual Net Profit! 

The Debt is part of the "Bank term loans/short term/pre-shipment loans/trust receipts/bill discounts" and part of it is used as pledge... but i don't see a clearer picture and would likely avoid it.

Technical

Wilmar seems to be still stuck in a consolidation phase and shows no sign of clear breakout towards the top. Discretion is the better part of valour here...

Let's look at Olam then...

OLAM

Fundamental

I am able to obtain Olam 10 years financial data from its website and it really open my eyes wide...

It's amazing to see how their sales has been so consistently increasing... and ROE at 21.3% annually!

Olam really looks like what Warren Buffett will invest in to me...

Technical

Olam is on a steady uptrend now... but current markets are facing a slight pull-back from the Europe Woes (germany not doing well, china + japan tensions grow blah blah blah...).

Despite all that, a good entry would be around $1.95 to $2 :)

So what do you think of my comparison of both Olam and Wilmar? Any comments is deeply appreciated and can allow more ideas to be shared around. :)

Hope you like my post and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!

SELL Creative Singapore at $3.39 on Aug 9

Despite a happy moment for Singapore on its 47th Birthday, one firm is in trouble after chalking up 3 years of consecutive losses - Creative Singapore.

Creative has reported its earnings (or losses) report after market closed on Wednesday and markets are still closed due to National Day.

An important announcement is made after its Full Year reports as seen below:

*************"

Name of Issuer: CREATIVE TECHNOLOGY LTD hereby gives notice that:

(i) it has recorded pre-tax losses for the three (3) most recently completed consecutive financial years (based on the latest announced full year consolidated accounts, excluding exceptional or non-recurrent income and extraordinary items); and

(ii) its market capitalisation as at 08-08-2012, the last market day on which trading was not suspended or halted, isS$237.1 million.
(Trading is deemed to be suspended or halted if trading is ceased for a full market day.)

The Company wishes to draw investors’ attention to Rule 1311 of the Listing Manual which states that the Exchange will place an issuer on a watch-list if it records:

(i) pre-tax losses for the three (3) most recently completed consecutive financial years (based on the latest announced full year consolidated accounts, excluding exceptional or non-recurrent income and extraordinary items); and

(ii) an average daily market capitalisation of less than $40 million over the last 120 market days on which trading was not suspended or halted. For the purpose of this rule, trading is deemed to be suspended or halted if trading is ceased for the full market day."

**************************

News Articles can be seen here:

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1218955/1/.html

http://business.asiaone.com/Business/News/Story/A1Story20120809-364435.html

Luckily Creative is not a small-cap company, but however, more bad news await for Creative...

1) Currently embroiled in a lawsuit with a vendor over a wireless broadband network project

2) Creative does not expect an improvement to be registered at the end of the current quarter & is expecting to report an operating loss for the year.

3) Company said the overall market for its products remains challenging

The technical conditions also back up the fundamental analysis...

If you look at the chart, Creative is at the tipping point of a descending triangle. If such bad news and net losses keep pillng up, i believe there is only one way for it to go... Down.

Hope you like my post and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!

Temporary Decline, Long Term Rise on the Radar

This is from an email i received... from a very respected stock technician which i think is highly accurate. The Stock Market May be Nearing a Hard Decline By Jeff Clark Tuesday, August 7, 2012

It's happening again… the sneers, the nasty e-mails, the public ridicule… And that's just from my friends. "How's that big stock market decline working for you?" my friend Mark asked me yesterday. It's not working very well, of course. The S&P 500 has worked methodically higher since I started banging the caution drum a few weeks ago. The S&P 500 closed near 1,400 yesterday – up 2.5% in just the past month. So despite warning signs from the Volatility Index, the NYSE and Nasdaq Summation Indexes, and the McClellan Oscillator, owning stocks has been a profitable strategy. Hence, the public ridicule. Of course, that ridicule occurred back in April as well – when the market ground higher despite multiple caution signs. Eventually, the caution proved warranted… The S&P 500 dropped 9% in May and erased all of its gains for the year. The market is near the exact same condition today. So despite the nasty e-mails and sneers, I think it's best to err on the side of being too cautious right now. Please understand, I'm not bearish on stocks… I still think stocks will end the year slightly higher than where they are now. But jumping onboard the momentum train when the S&P 500 approaches its high for the year and a number of technical indicators turn bearish does not seem like a good strategy to me. Rather, it seems more prudent to use any hard declines as buying opportunities. And given the look of the following chart, we may be nearing the start of one of those hard declines right now… This is a 30-minute chart of the S&P 500 – which works best as a short-term timing tool. The index is tracing out a bearish rising-wedge pattern, and it is bumping up into the resistance line of the wedge. This resistance should at least cause a pause in the uptrend and a decline back toward the support line at about 1,370. Notice, however, the negative divergence on the MACD momentum indicator. While the S&P 500 has made a recent series of higher highs, the MACD indicator is still below its July 30 high-water mark. So the momentum behind this most recent rally is weakening. This is a good clue that the next move lower in the market might develop into more than just a small pullback toward support. It may end up retracing the entire move higher over the past two weeks… and challenge support at 1,330. Bulls will do better waiting to buy at that level rather than chasing the market higher right now. Best regards and good trading, Jeff Clark My Two-Cents I believe the trend has gone up too fast in a short period of time. Some consolidation will occur and the STI may drop back to the Horizontal support line and continue to climb up thereafter. Nevertheless, I have already stated in my previous blog posts 1) http://kissinvesting.blogspot.sg/2012/03/euro-worries-wanes-beginning-of-global.html 2) http://kissinvesting.blogspot.sg/2012/06/outcome-of-greece-election.html that... stock indexes all over the world will bounce back again! I still want to reiterate my point that the Worst is over, and even the not-so-bad news will push the markets up! Especially when i see from the forums everyone has the CASH vault ready. You won't want to be missing from the Bull Run when everyone is pumping their available cash into equities! Hope you like my post and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!

BUY Noble Group @ 1.04 on 28/7/2012

After the Positive News from European Central Bank Chief that he is vowing to protect the euro, stocks shot up sharply higher in Europe and US by 1+%.

Not wanting to waste this chance of optimism, I look around my familiar ground scanning for growth stocks.

As i looked through the list of Top 20 volume in SGX website, Noble Group caught my eye with a small increase of $0.005. What was really interesting is that its share price has originally been dropping non-stop and now showing signs of turn-around!

I plugged into ChartNexus and saw that RSI was at 18.2 (Anything below 30 = oversold) and it is bouncing back to the long-term support line of $1.052.

I went to check out the Analyst Reports at Reuters and got the info below:

Much as i do not like following Analyst Reports, when none of the 20 analyst gave "Underperform" or "Sell" comments, I believe it is an added bonus for my trade (We have to face it, many people still base their stock picks on analyst reports without doing their own research).

Coupled with the Positive market sentiment which i believe will continue at least for a few days (since US is also having better-than-expected economic reports); Noble Group Limited is a good one.

Hope you like my post and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!

One of the World's Safest ways to Trade

Kissinvestor Input:
Got this Article by some email subscription... I find that its really a good way to earn some side income while the market is whip-sawing now... So here it goes:

Why This Is Our "Greatest Wealth Secret" By Amber Lee Mason and Brian Hunt, DailyWealth Trader Monday, July 23, 2012

We call it "S&A's greatest wealth secret"… It's selling puts on high-quality, dividend-paying companies when they suffer a temporary setback. It's one of the world's safest ways to trade. And once you get familiar with how it works, it's as easy as clicking your mouse. If you're looking for a high-income trading strategy, you won't find one better than this. Here's how it works… When you sell a put, you get paid to agree to buy shares of a stock at a set price by a set point in time. When you use this strategy on beaten-down blue-chip stocks, you almost can't go wrong. Take our trade on Procter & Gamble (PG), for example… Procter & Gamble owns dozens of ubiquitous household brands, including Tide, Gillette, and Charmin. Twenty-five of those brands each generate $1 billion or more in sales every year. The company uses all that cash to support a rock-solid dividend (it now yields 3.5%) that has grown every year for more than five decades. Over the last couple years, shares of PG have waffled between about $60 and $66. But stock market weakness last month pushed shares toward the bottom of their range. We took that opportunity to tell our DailyWealth Trader readers to sell puts on the stock. They agreed to buy shares at $60 between then and October. In exchange for making that agreement, they collected $2.65 per share. Their "cost basis" if they had to buy shares was $57.35 (the $60 they agreed to pay minus the $2.65 they collected). The last time Procter & Gamble spent any time below that price was back in 2006. And buying at that price would lock in a 3.9% annual dividend. The yield hasn't been that high since the late '80s. As you can see in the chart below, PG staged a big rally off those June lows. Shares have popped 7% higher since we wrote up the trade…     If this rally reverses and shares end up below $60, our readers will own Procter & Gamble at an incredible price. But right now, it seems more likely they'll walk away with their $2.65 "dividend" and never have to buy shares. Just like any organization, a huge company with great brand names and growing cash flows will suffer short-term setbacks. When these setbacks arrive, shares sell off and get cheap. That's when put-sellers can come in and collect safe cash payments. The upside is you collect instant cash, the downside is you buy an elite company for a good price. That's why it's one of our greatest wealth secrets. Hope you like what i have just shared and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!

Penny Stocks with Growth Prospects

There has been always Analyst Reports about Blue Chips or the few similar counters they always cover.

Personally, I like to seek out hidden undervalued gems, just like Sarin (A previous blog post I have written before) and Osim; OR Penny stocks with growth prospects going forward.

Below i come out with a list of Penny stocks & the reasons why they have the potential for huge capital gains:

1) Dukang Distillers Holdings [Current Px: $0.26]

1. PEG of 0.4x [http://www.theedgesingapore.com/component/content/article/35714.html]
   
2. Organize Eye-opening visit for Investors [http://www.nextinsight.net/index.php/story-archive-mainmenu-60/911-flash-news-2010/5371-dukang-distillers-hosts-eye-opening-visit-for-investors-]
   
3. May consider moves for Share-buyback or Give out Dividends [http://www.nextinsight.biz/index.php/story-archive-mainmenu-60/916-2012/5263-dukang-distillers-considering-dividends-share-buyback]

2) Midas Holdings [Current Px: $0.345]

1. Rapid Growth in Securing contract wins [http://midas.listedcompany.com/newsroom/20120711_172609_5EN_3EA9C2ED1C08A79548257A38003307DD.1.pdf]
   
2. Turn-around with China govt package for metro trains
   
3. High Volume = High Demand [http://sg.finance.yahoo.com/q/ta?s=5EN.SI&t=1y&l=on&z=l&q=l&p=v&a=&c=]

3) Nam Cheong [Current Px: $0.191]

1. Soaring Net Profit (Doubles for 1Q 2012) [http://www.shareinvestor.com/news/news.html?source=si_express&nid=48783]
   
2. Dominant OSV-builder with a 50%-75% market share; benefitting from Malaysia RM300b 5-year capital expenditure
   
3. Order book surging to RM874m [http://files.shareholder.com/downloads/AMDA-GJWBU/1938933692x0x578449/EAA85944-0035-40A8-8840-4313FE50A0D7/AmFraser_120621_Nam_Cheong_-_Maintain_BUY_-_Swinging_up_the_value_chain.pdf]

Besides these few stocks, I believe there may be more out there that i missed out.

Feel free to bring the stocks up on the comments and i will cover them again next time!

Hope you like my post and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!

STI + Stocks Chart Analysis 06/24/2012

Though Fundamental Analysis is important for long-term investment, i personally prefer to combine it with Technical Analysis for better precise entry-exit positions.


I have time to go through the charts of STI and other Singapore stocks like Sakari, Noble, Breadtalk etc... and they are all trending up after hitting a bottom (see charts below)

Yeah, you may be wondering if all the Euro crisis or China under-performance will drag down the markets again.. but as i said in my previous blog post; the worst is already priced in, and it can only get better with all the leaders doing something about it (specifics which i don't really care).

Thus, i believe we can capture some gains now just like January rally... :)

Hope you like my post and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!

The Most Popular Trade Is Going to Explode… Again

I got this article written by a well-known trader in my inbox and it makes lots of sense to me so i wanted to share with everyone...

About every year at this time, currency traders lose their minds… Then they lose their shirts. It's going to happen again this year.
 
The most popular trade in the currency market right now is to be long the dollar and short the euro. At first glance, this seems like a reasonable trade. After all, Europe is on the brink of collapse. And as the continent dissolves, investors flock to the safety of the U.S. dollar. It's the ultimate "risk-off" trade.
 
But here's the thing… the world has a habit of not coming to an end.
Think about it. Back in May 2010, Greece was threatening to default on its debts. Spanish banks were in trouble. Ireland, Italy, and Portugal were facing liquidity issues. The dollar rallied 7%-plus that month alone. That's an enormous one-month move for a currency. The most popular trade on the planet was to be long the U.S. dollar and short the euro. 
 
And it did. The dollar fell 10% over the following two months as traders realized the world wasn't going to end.
 
Fast-forward to this time last year. The financial disaster in Europe took over the headlines. Greece was threatening to default. Spanish banks were in trouble. Yada yada yada. Once again, traders swarmed to the dollar, and the greenback gained 5% in May.
 
It gave up all the gains, though, just one month later.
 
Now, it's the same old story. Once again, the long dollar/short euro trade is the most popular position on the planet. The dollar has rallied 5% this month, and everyone is talking about the euro collapsing.
 
Yes, it is 2012 – and maybe the Mayans were on to something – but I just don't see Armageddon happening while everyone is looking for it. Financial markets do not reward popular trades. (This month's disastrous Facebook IPO is a good example of that.) So while everyone is looking for continued dollar strength and euro weakness, I think the better idea is to do the opposite…
 
I'm not quite ready to buy the euro yet. Its downtrend is extended. But it hasn't quite reached the oversold levels it hit in 2010. And with the Greek election coming up in mid-June, there's plenty of time for some more downside volatility… but probably not much more.
 
Over the next two weeks, I'll be looking for opportunities to put risk back on. Everything that sold off this month as the dollar rallied is going to rally when the "long dollar/short euro" trade blows up. Get ready for a hard bounce in commodities and stocks and a hard fall in bonds and the dollar.

Short-Sell Alert - Coscocorp 23/2/2012

Just a quick one as the night is late...

Coscocorp... the so-called biggest shipyard in China but listing in Singapore...

However, if you take a comparison of how its stock price fares against its closer and much more efficient competitor - Yangzhijiang, you will realise how coscocorp doesn't live up to its reputation.

Furthermore, take a look at its dismayed reports just released today... leading to a sharp selldown of nearly 5%.

Despite an increase in Debt [sorry i accidentally deleted the top heading of the year], look at Borrowings from 555,148 to 1668,322 (300% INCREASE IN BORROWINGS!) and they still raked in a loss of 44% in Net Profit!

They have highlighted its all due to the higher raw materials and costs etc.. However, why is it that other firms like Yangzhijiang can perform much better than them? It boils down to the internal problems in Coscocorp and management team, in short, CMI.

Following the major turn in the stock markets outlook now, I have capitalized on the downtrend & taken a Short-Sell position on Coscocorp at the price of $1.225. Hope it works out! :D

Is There A HOLY GRAIL To Make Consistent Profits?

In this enlightening post, i would like to honor my past senior in my SIM investment club. He is a very knowledgeable FX investor and has won many prestigious competitions before. He is humble and affable too. Most importantly, i think this article will benefit many people greatly. So here goes: 

“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.”

- Jesse Livermore (legendary stock trader)

These days when you browse through our local newspaper you will find a lot of advertisement for a ‘free preview’ to a three day financial trading course. The advertisements often cite how their graduates using their strategies make an income of thousands of dollars consistently every month from trading, sometimes even more than ten thousand dollars in a single month. When you attend these free previews, the advertisers will show you historical charts and try to convince you how easy it is to make profits using their system, a key part of their system consistent of technical analysis. You often have to pay S$3000 or more to attend a three day course to learn their system.

Many people will wonder if these advertisements are real. If you were to pay for the three day course, can you duplicate the results of what they claimed on the advertisement, making thousands of dollars consistently every month just from trading? Is there a ‘Holy Grail” to make consistent profits?

Personally, after two years of trading in the foreign exchange market primarily using technical analysis, I believe that even if these systems were to have an edge over the market and is able to produce consistent profits over a certain sample size of trades, a substantial portion of the people who attended the course will not be able to duplicate the same positive results. This is because trading with real money involves very intense emotions like fear, hope and greed. To make consistent profits every month requires a strong emotional/psychological control and a very high level of discipline to maintain a very strict risk and money management rules. Even though the three day advertised courses do teach the psychology of trading, discipline and risk management, the majority of people who are new to trading may not be able to condition their minds with the required discipline and psychology needed to become a consistently profitable trader.

It is very widely quoted that 95% of all Forex traders are losing money, I find the statement to be very true due to the reasons mentioned in the previous paragraph. Jack Schwager, who wrote the “Market Wizards: Interviews with Top Traders” series, interviewed many top performing investors, traders and fund managers. Most of the top traders interviewed said that discipline is the most important tool that they possessed; they did not give much credit in their trading system. Whereas in the case of the advertiser trying to sell their three day courses for thousands of dollars, the highlight is often on their trading system.

I believe that there is no holy grail to making consistent profits. To become a consistently profitable trader, much effort must be exerted to develop the metal conditioning, correct trading psychology and a very high level of discipline in risk/money management. A trading system would be secondary if you already have the attributes mentioned above.

Characteristics of an Unprofitable Trader:

1. Wants to make big money fast
2. Are not bothered to develop a proper trading plan or rules.
3. Keeps changing systems or technical indicators hoping to find a holy grail
4. Addicted to the thrills and excitement of trading
5. Does not have the discipline to follow a risk management plan.
6. Does not adhere to any money management rule.
7. Makes trading decision based on emotions.
8. Believes that high frequency trading equal a higher change of winning
9. Do not try to develop the correct trading psychology
10. Abuse the use of high leverage

A Trader Who Has Good Chance at Success Has the Following Characteristics:

1. Is properly capitalized
2. Treats trading like a business
3. Has a low tolerance for risk
4. Trades only when the market provides an opportunity
5. Can control emotions
6. Has a trading plan
7. Has a risk management plan
8. Is incredibly disciplined
9. Is focused
10. Has backtested his trading methodology

Written by:

Liu Weimin

SIM’s Investment & Networking Club

I.T. & Research Director (Academic Year 2009/2010)