Create Wealth Through Stocks Trading

Three Little Pigs In The Stock Market

2009-11-10T08:24:00.001+08:00

The first Little Pig built his house using straws and it was a nice house. But when the bad wolf came and blew it hard and the straw house collapsed and the first little pig ran away. When we first buy a particular stock, it is no difference from what the first little pig did - building his house with straw. The particular stock that we have just bought is in the weakest position and facing the highest. risk It is not sitting on any past realized profit except facing potential realized loss or already nursing the sorrow of paper losses.

The second Little Pig built his house using woods and it was a better and stronger house. But when the bad wolf came and blew it hard but the wolf blew very hard to blow the house down. When we buy back that particular stock again on pull back or correction, it is no difference from what the second little pig did - building his house with wood. Now, this particular stock that we have just bought is in a stronger position and facing lower risk as it is now sitting on some realized profit and it will take more downside for us to sit on any Nett unrealized losses.

The third Little Pig built his house using bricks and it was a very strong house. But when the bad wolf came and blew it hard, harder and hardest but the brick house remained steady. After a number of successful stock transactions, we may have acquired a new pillow stock and we will never lose our capital anymore. It is a strong and steady house for all the three little pigs to live happily ever after.

http://createwealth8888.blogspot.com/2009/05/investment-by-nature-is-risky.html

So are you the third Little Pig?

DOW - Dow Ends at New Highs for Year After G20 Pledge

2009-11-10T07:33:00.000+08:00

http://createwealth8888.blogspot.com/2009/11/dow-clearing-last-major-resistance-soon.html

What are you seeing?

DOW is breaking the last resistance and at same time facing panic profit taking soon?

STI - more likely to range bound?

2009-11-09T22:15:00.000+08:00

Wealth Or Financial Freedom Doesn't Just Happen!

2009-11-09T22:01:00.001+08:00

Some 15 years ago, the official retirement age in Singapore was 55. One day at one of my former big boss’s farewell dinner, he said something and at that time I didn't really understand what he was preaching?

It was many years after that I realized the truth of what he had said.

He said at his farewell speech something like this if I could recall it correctly.

"I chose to retire at 50 as I think I have made enough to last me for my life time. I want to travel and see more of the world when I am still healthy and can move easily. I didn't decide to retire suddenly at 50, but actually I plan to retire at 50 many, many years back."

Can you see the world when you become like this?

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I think I started to plan for early retirement a bit too late in 40s and I congratulate those in 30s and late 20s really start to plan for their early retirement. Well done!

Semb Corp: Contra $3.34, ROC 3.1%

2009-11-09T13:11:00.000+08:00

Hope to gather more feathers for a bigger pillow soon ...

Round 50: ROC 3.1%, 6 days, B $3.22 S $3.34

Round 49: ROC 7.9%, 91 day, B $3.14 S $3.41

All work sucks?

2009-11-08T18:19:00.002+08:00

http://sgfinancialfreedom.blogspot.com/2009/10/conversation-with-millionaire.html

All work sucks. It is how much you are compensated for it in monetary terms that matters.

Work Sucks: That is the reason why we need Labor Day. One full day to relax away from work and count the hours until you’re forced to return to your joyless, monotonous job that sucks.

Another important day that you must stay away from work. It is your Birthday!

Who are the people likely to shout work sucks?

May be those people in the Left Quadrant are most likely to shout work sucks and it is not surprisely to include self-employed like taxi-drivers, hawkers, private tutors, dentists, etc. My ex-classmate who is self-employed dentist also say that his work sucks - working a 7-day week and long hours and he is hoping for an early retirement.

How often do you hear those people in the Right Quadrant shout work sucks? May be these people don't really use their own human labour intensively; but leverage on others and their capital to get works done so they don't really feel work sucks.

So follow Rich Dad Poor Dad's advice, try to spend less time and energy in the Left Quadrant and move more into the Right Quadrant, and then you don't need to look forward to the next Labour Day.

Becoming A Millionaire?

2009-11-08T12:47:00.001+08:00

Three possible ways to become a Millionaire:

The Luckiest Way

Do this: http://www.singaporepools.com.sg/jsp/lottery/toto_estimate.jsp

Bad news is that we can wait till the day we die and God of Fortune still never come like in the case of my parents and my father-in-law.

The Nicest Way

Gift from parents and becoming instant Millionaire

Bad news is that not many of us are born lucky to have rich parents who can pass us.

Some of us already feel so lucky if parents don't leave behind debts for us to clear.

The Hardest Way

Making your millions from the market:

Unfortunately, this is the hardest, toughest, and longest journey to become millionaire.

Bad news is that if you make big investment mistakes, then this can happen:

I am trying to do either the Luckiest way or the Hardest Way. Wish me luck!

Portfolio Management - Asset Allocation, Diversification, and Rebalancing

2009-11-08T10:57:00.002+08:00

http://createwealth8888.blogspot.com/2009/11/portfolio-management-measuring-success.html

http://createwealth8888.blogspot.com/2009/11/beginners-guide-to-asset-allocation.html

Let recall what were discussed in the earlier posts:

The Magic of Diversification.

The practice of spreading money among different investments to reduce risk is known as diversification. By picking the right group of investments, you may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing too much potential gain.

Asset Allocation 101

Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. The process of determining which mix of assets to hold in your portfolio is a very personal one. The asset allocation that works best for you at any given point in your life will depend largely on your time horizon and your ability to tolerate risk.

In his classic book "The Intelligent Investor," Benjamin Graham -- Mr. Buffett's mentor -- advised splitting your money equally between stocks and bonds. Graham added that your stock proportion should never go below 25% (when you think stocks are expensive and bonds are cheap) or above 75% (when stocks seem cheap).

Graham's rule remains a good starting point even today. If time turns out to be your enemy instead of your friend, you will be very glad to have some of your money elsewhere.

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CreateWealth8888:

So my friend, asset allocation, diversification, and rebalancing can be very personal and you must find the right mix according to the size of your nett worth.

I just cannot follow Classic or Graham's advice into Stocks and Bonds as I don't have a Private Banker to advise me on the timely availability of good yield bonds that on private fire sale. But, I do have a "mini bond" approach (I know what you are thinking, it is definitely not the toxic Lehman Brothers MiniBonds. LOL).

Why Bonds?

Typically, bonds pay interest semiannually, which means they can provide a predictable income stream. Many people invest in bonds for that expected interest income and also to preserve their capital investment

My "MiniBond" Approach:

MiniBond = CPF Ordinary Account + Pillow Stocks+ Dividends From Pillow Stocks

So my "MiniBond" has the similar effect of expected interest income (2.5% interest rate from CPF OA account and average of more than 5% yield from pillow stocks) and capital preservation (pillow stocks are cost-free so there is no capital at risk)

Follow the Golden Rule:

Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash

This is what I have done:

With the personal choice of mix of asset allocation, I will be able to limit losses in the stock market and reduce the fluctuations of stock investment returns without sacrificing too much potential gain and can still expect some regular passive income that will meet the minimum cost of living expenese.

Beginners' Guide to Asset Allocation, Diversification, and Rebalancing

2009-11-08T10:07:00.002+08:00

http://www.sec.gov/investor/pubs/assetallocation.htm

I Know You Love Your Job

2009-11-07T15:54:00.000+08:00

I know you love your job; but, for how long will you keep working hard on it and then slowly, slowly and slowly you will turn into ......... http://www.beerorkid.com/avatars/love_your_job.gif

Oh my goodness!

How Long Will It Take For the Job Market To Fully Recover?

2009-11-07T15:43:00.000+08:00

Posted by davemanuel.com

With the unemployment rate in the United States currently ticking upwards towards the 10% mark, many people are starting to ask the question - how long will it take for the jobless rate to fall back to pre-recession levels?

There is no easy way to predict this - there are so many different variables involved that trying to answer this question becomes a futile exercise.

However, one thing that we CAN do is look at past recessions in the United States and see how long it took the jobless rate to recover to pre-recession levels.

In this article, we'll be looking at four different recessions. They are:

2001-02 Recession (post 9/11)

1990-91 Recession (Gulf War era)

1981-82 Recession (Stagflation)

The Great Depression

1. 2001-02 Recession. This recession (technically) lasted from March '01 until November '01.

The United States went through a tremendous period of upheaval during this time (dot-com bust, 9/11, war in Afghanistan).

However, in terms of jobless rates in the United States, this recession was as weak as they come.

Prior to the recession starting in March of '01, the unemployment rate in the United States was around 4.3-4.4%.

The rate ticked as high as 6.3% in June of 2003, and then proceeded to steadily trend lower over the following years.

By late 2006 (October of 2006 to be precise), the unemployment rate in the United States had returned to pre-recession levels.

So, from start to finish, the unemployment rate took approximately 6 1/2 years to recover.

2. 1990-91 Recession. This recession lasted from July of 1990 until March of 1991.

Prior to the recession starting, the jobless rate in the United States was around 5.2%.

The jobless rate ended up hitting a high of 7.8% in June of 1992 before starting to trend lower.

The unemployment rate in the United States didn't fully recover until August of 1996 (5.1%).

Total Recovery Time: Just over six years.

3. 1981-82 Recession. This recession lasted from July 1981 until November of 1982.

In terms of overall severity, this recession is much more comparable to what we are currently going through.

Prior to this recession taking place, the US economy already had its share of problems (namely, the 1979 energy crisis that caused inflation and jobless rates in the United States to spike higher).

Before the recession technically got underway in July of 1981, the jobless rate in the United States was already up to 7.6%.

This helps to create a bit of an unfair comparison since unemployment rates in the country were already so high.

Because of that, we'll take the rate from April of 1979 (5.8%) and examine how long it took to fall back to this rate from July 1981 onwards.

The unemployment rate in the United States spiked to 10.8% in late 1982. The economy was in shambles at the time due to high inflation which was brought on by high energy prices.

The economy did recover though, helping Ronald Reagan to sweep to victory for a second term.

The unemployment rate in the United States dropped to 5.8% in November of 1987, meaning that it took just over 6 1/2 years to fully recover.

4. The Great Depression. Some people feel as though the Great Depression lasted from 1929 until 1932-33, however most feel as though it extended right through until the onset of WWII in 1939.

Prior to the "Great Depression", the unemployment rate in the United States was 3.14% (1929).

Just a few short years later, the unemployment rate in the US had topped 20% (23.6% in 1932, 24.9% in 1933).

The entry of United States into WWII really helped to dramatically decrease the unemployment rate in the country, and by 1943, the jobless rate was under 2%.

The "Great Recession" started in December of 2007.

In November of 2007, the unemployment rate in the United States was 4.7%.

Economists expect that the rate will top 10% in early 2010 before starting to trend lower.

How long will it take until the unemployment rate in the United States is below 5% again? It's tough to say, but based on past recessions, we could be in for a bit of a wait.

Will we see a full recovery by mid-2014? Earlier than that? Later?

Source: Historical Unemployment Rates in the United States
Wikipedia.org - List of Recessions in the United States
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Createwealth8888:

Hmm... Look like Bulls don't depend on better employment rate to charge up.

StarHub Weekly

2009-11-07T14:48:00.002+08:00

CPL Weekly

2009-11-07T14:31:00.002+08:00

SML Weekly

2009-11-07T14:27:00.002+08:00

DBS Q3 profit up 49%

2009-11-07T13:28:00.000+08:00

Net interest income - revenue from borrowers after interest is paid to depositors - rose 6 per cent to $1.1 billion as net interest margins rose to 2.03 per cent from 1.99 per cent.

Deposits increased 1 per cent to $180.2 billion, with the mix shifting towards current and savings accounts.

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Did you see the huge amount of cash hoarding in the bank? Sooner or later these loss-averse savers are going to get out and move into the stock market in big way to become the next Greater Fools.

DOW - Clearing The Last Major Resistance Soon?

2009-11-07T07:10:00.000+08:00

U.S. stocks rose 3 percent for the week after ending Friday's session slightly higher, shrugging off government data showing the unemployment rate hit 10.2 percent -- the highest in 26-1/2 years.

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DOW has three positive days and two days closing above 10,000 mark, the job data was really bad but it didn't cause fearful panic selling??? So what does it mean? BUY?

Risky Rio rig business

2009-11-06T22:52:00.000+08:00

International drilling contractors invited to bid in a Petrobras tender for up to 28 ultra-deepwater rigs have expressed concern about the economics of building the units in Brazilian shipyards.

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Another positive news for Kep Corp and SML as they already have yards in Brazil and harder for their competitors.

Who Moves My Market? - Part 5

2009-11-06T21:58:00.000+08:00

http://createwealth8888.blogspot.com/2009/11/who-moves-my-market-part-4.html

Price and Volume Action -The Importance of Volume

Why do we buy and sell?

There are only two reasons to buy:

1. Price will stop falling
2. Short covering

There are four reasons to sell:

1. Profit taking
2. Force selling
3. Cut losses
4. Short selling

Price of the stock is telling us what is happening to the stock, but volume tells us how it is happening. Volume reflects the sentiment of buyers and sellers and it then drives the price up or down.

A price rises on heavy volume means buyers exhaust the sellers and buyers are pushing the price higher as they fear of missing out. Likewise, a price declines on heavy volume means sellers exhaust the buyers and the sellers are pushing the price lower as they fear of further losses or fear of losing profit.

Why heavy selling or heavy buying? That is our job to think over it and decide whether we want to join in the action or not?

Another important reason is that technical analysis on charts on low volume stock may be unreliable and so don't try to analyse too much and mislead yourself.

Olam Weekly

2009-11-06T21:24:00.000+08:00

Is Your Company Hoarding Too Much Cash For You? - Part 2

2009-11-06T10:32:00.000+08:00

Someone said this in his blog:
Are my initial reasons for holding on to these stocks like: Huge cash reserves?

There is a saying: An Idiot and his money will soon part. Similarly, I will say: A Dumb CEO and the Company's huge cash reserves will soon part.

We may need to understand the perspective of CASH in a corporate environment. Cash is a just an instrument for the company for the purpose to:

• fund day-to-day expenses or in another word to manage a healthy cash flow.

• serve as cushion during bad times

• deploy excess cash as capital efficiently and effectively to fund future growth and to generate more cash.

Can investing be made so simple by just looking at a company's huge cash reserve? I wish too.

http://createwealth8888.blogspot.com/2009/10/is-your-company-hoarding-too-much-cash.html

Do you still see huge cash hoarding as a buy signal?

Olam - Got back @ $2.48.

2009-11-06T09:02:00.000+08:00

Last sold @ $2.65

http://createwealth8888.blogspot.com/2009/10/olam-sold-265-roc102.html

DOW - Back to 10,000 level! Dow Rises Most Since July

2009-11-06T07:27:00.006+08:00

The Bulls Never Give Up Actually!

Upward Trend continue....

Olam - Desperately sold down by BBs again!

2009-11-05T22:57:00.000+08:00

http://createwealth8888.blogspot.com/2009/10/olam-weekly-will-you-be-desperately.html

http://createwealth8888.blogspot.com/2009/09/olam-what-happening.html

Not surprising Olam got sold down again! Classic works by BB?

Who Moves My Market? - Part 4

2009-11-05T11:40:00.001+08:00

http://createwealth8888.blogspot.com/2009/11/who-moves-my-market-part-3.html

Support and Resistance

I like the simplicity of support and resistance. It can work because it is based on simple crowd psychology; but, sophisticated traders don’t like to admit it that it can work. Many Gurus have developed so many technical indicators, and every Guru claims their indicators work best. Who should we believe?

If you could predict where the market is heading, you would be a millionaire many times. Unfortunately, no one has developed an indicator that will predict the future. Many indicators have been created that will give you a probable direction of the market. But, the concept of support and resistance have not been claimed to be developed by any Gurus and it can also be predictive and even allow you to queue to buy or sell your stocks well ahead of any other indicators.

Support is a price level where the market has difficulty dipping below it because the demand is sufficiently high at that level. Support levels are always on or below the current price. In other words, the support line is where the price stops falling. But, support can be broken and there can be few more supports when the stock price starts crashing down. It will only stop due to lack of sellers or more willing buyers step in.

Resistance is the opposite of support. It is a price level where the market has difficulty surpassing that price level because the selling forces are strong at that price. Resistance levels are always on or above the current price. Same as support, resistance can be broken and there can be more than one resistance for you to take partial or full profit.

It is surprisingly simple, and can be effective way to trade. Buy near the support lines, and sell near the resistance lines. The only problem is which support or resistance line as there can be more than one? Train hard to see one. Cheers!

Olam - BBs have too much nuts now vomitting out?

2009-11-05T09:18:00.001+08:00

$2.61 broken!!!! More to come ...