Making Dollars Cents

Choosing a Trading Representative

2011-07-13T01:00:00.000-07:00

Extracted from http://onefinanceasia.com/forumsview.php?tid=109

The following is a list of characteristics and qualifications you should establish in choosing your trading representative:

—Easy to talk to. You should feel comfortable with your trading representative. The more your trading representative knows about your financial situation and goals, the better your account will be served. You will be giving your trading representative some very personal information. If you feel uncomfortable, you may not give your trading representative as much information as might be needed to properly service your account.

—Doesn’t pressure you. You need to keep in mind that your investments must please you, not just your trading representative. A good trading representative will take the time to find the investment strategy that is best for you and won’t put you into a certain investment just because other customers are.

—Pays attention and acts on what you say. If you tell a good trading representative that you don’t want a certain degree of risk or a certain type of investment, then that trading representative won’t be constantly recommending that investment to you. On the other hand, a good trading representative will try to find out why you don’t want a particular investment and may even recommend the investment if he or she believes that such an investment is best for you.

—Explains things until you understand. The securities business is very complicated and can be difficult to understand, especially if things aren’t explained properly. A good trading representative will provide you with information and will take as much time as necessary to explain a proposed transaction until you understand. Remember that this is your investment—you have every right to understand exactly what is going to happen with it.

Dividend stocks: quality counts too

2011-07-08T08:32:00.000-07:00

Hock Lock Siew
By MICHELLE TAN
5th July 2011

THERE has been a big buzz around dividend stocks since the last global financial meltdown as investors and funds start to see the importance of establishing a regular income source, especially when the going gets tough.

Moreover, with Singapore's population demographics reflecting a fast ageing population, dividend stocks also serve as an avenue to generate income to fund retirement especially for investors with weaker saving habits. However, are dividend stocks really such a god-send, or have they been over-hyped by financial media?

In general, analysts and investors ascribe a lower risk and volatility profile to dividend stocks due to their ability to generate regular streams of income that help bolster the ill-effects of a potential downturn.

But does this mean that dividend stocks are less likely than their lesser yielding peers to see price upswings due to their less volatile nature?

As a simple illustration, should one compare the basket of 30 Straits Times Index (STI) constituents with a basket of 30 dividend stocks, findings show that though both portfolios generated positive year-on-year price returns, the former reflected a higher annual return of 13.8 per cent as opposed to the 9.6 per cent registered by the dividend stock portfolio.

As such, based on the findings, it seems that dividend stocks tend to experience lower capital appreciation when compared to index stocks.

Having said that, the STI basket is made up of blue-chip quality counters that tend to be highly favoured by both institutions and layman investors alike.

Perhaps, if the comparison was drawn to a basket of lower cap counters, findings might have shown otherwise.

Now coming from a dividend perspective, dividend stocks triumphed over the STI basket with the former having a forecast consensus dividend yield average of 6.2 per cent in FY11 and 6.5 per cent in FY12 as compared to the latter's 3 per cent and 3.3 per cent for the respective financial years.

The findings are not surprising though investors should bear in mind that the STI portfolio has some dividend stocks, which would have given a slight lift to the basket's average yield.

Should the basket exclude dividend stocks entirely, the average dividend yield would have been even lower.

More pertinently, the dividend stock portfolio, unlike the STI one, is able to outstrip domestic inflation rates, which is cited as a key worry for investors today.

As such, investors who are unable to buy commodities like physical gold or property to hedge against inflation could perhaps turn to dividend stocks as their answer to a cost-efficient inflationary hedge.

But there are no fool-proof investments in this world. Just like any equity, dividend stocks are still susceptible to industry recessions and other sector-specific woes.

In fact, during the last recession, many dividend stocks such as real estate investment trusts (Reits) were not spared from the falling knife.

Admittedly, there was sunlight after the rain for investors that had the financial muscle to tide through the rough patch.

But for investors who were retrenched and needed the funds, liquidating dividend stocks such as Reits - and other non-dividend stocks - back then would have severely decimated their wealth.

All that said, it is an undeniable fact that all boats sink when the tide falls. But one of the better known ways to break the fall is to diversify.

After all, putting all your eggs in one basket is never a wise move, especially from a capital protection standpoint. And this holds true even for stocks with a more conservative risk profile, such as dividend stocks.

The key point to drive home is that whether one is planning for his retirement or is merely seeking extra side income, quality is still of paramount importance.

A high yielding stock does not always mean it is a good stock. Though a stock with sound fundamentals and with attractive yields to boot would be a wise investment option.

Worries trigger property stock sell-offs

2011-07-07T21:58:00.000-07:00

Published 20 June 2011
The Business Times
By Uma Shankari

SINGAPORE-listed property stocks, which have taken a beating since the start of this year, are now trading at up to 50 per cent below their revalued net asset values (RNAVs) – a level of discounts that was last seen in 2009 during the recession.

‘Sentiment towards property stocks have been dampened by the spate of uncertainties in the sector and property stocks are now trading at an average of over 30 per cent discount to RNAVs – which is back to the 2009 levels,’ said DBS Vickers analyst Lock Mun Yee.

Eight selected property stocks that DBS Vickers tracks are trading at discounts of 17 per cent to 50 per cent from their RNAVs.

Property stocks have been punished over the last few months as investors pulled back on policy risk and oversupply concerns.

In addition, developers with significant exposure to the Chinese market were hit further last week as data from China raised concerns that a slowdown in the world’s second-largest economy could lead to easing demand for homes.

According to DBS Vickers, CapitaLand – Singapore’s largest property group by market capitalisation – has shed 26 per cent of its value so far in 2011 and is now trading at a discount of 49 per cent to its RNAV.

CapitaLand’s retail unit CapitaMalls Asia was also punished for its China exposure. The stock has shed 27 per cent since the start of the year and is now trading at a 38 per cent discount to its RNAV.

City Developments, which has shed 20 per cent this year, is trading at a 17 per cent discount to RNAV. Keppel Land, which has lost 29 per cent so far in 2011, is now trading at a 40 per cent discount to RNAV.

By contrast, the benchmark Straits Times Index has lost just 6 per cent so far this year.

Analysts attribute the sell-off of property stocks mainly to speculation that another round of demand-side measures to cool the property market could be on the way.

‘The drip feeding of policy measures continues to dominate investor thinking,’ said Goldman Sachs in a June 9 report.

‘In particular, the expectation of an additional round of housing measures has been a further drag on the share prices of developers. ‘

But much of the policy risk has already been priced into real estate stocks, analysts noted.

OCBC Investment Research analyst Eli Lee pointed out that the share prices of major property developers (such as City Developments and CapitaLand) have fallen significantly year to date, despite continued increases in home prices, as investors braced for potentially lower prices ahead.

For the sector as a whole, home price dips have mostly been priced in, given significant forward visibility, Mr Lee added.

Since the market has already factored in possible headwinds in both Singapore and China, there could be good deals for the discerning investor.

Said DBS’s Ms Lock: ‘Stock prices appear to have factored in much of the uncertainties presently but re-rating catalysts in the near term may be modest. We would adopt a selective bottom up approach to stock picking.’

But having said that, it is important for investors to keep the following factors in mind.

Singapore has a new minister in charge of housing in National Development Minister Khaw Boon Wan. It is something that is keeping the market on edge, and unsure of how far his ministry will go to moderate demand for private homes.

Goldman Sachs pointed out in its report that the widening price gap between private mass market homes and public housing, or Housing Development Board (HDB) flats, is of particular concern.

‘The widening of the price gap between the private mass and HDB prices to about $490psf, a record, is turning into an insurmountable hurdle to upgrading aspirations, suggesting the government has little choice but to also moderate mass-end prices,’ said the firm in its report.

In addition, the long overdue review of the HDB household income ceiling is likely to shrink demand for private homes.

The income ceiling is widely expected to rise from $8,000 to $10,000.

Another big question mark hangs over developers’ exposure to China. The China situation could turn out to be a lot worse than expected.

But it could also turn out to a lot better. One point worth nothing is that China is not the United States – China’s slowdown in May was deliberately set off by government measures to cool the property market and prevent home prices from surging out of control.

In the event that the slowdown becomes sharper than anticipated, the Chinese authorities could always relook their policies.

Things to do..

2011-07-04T21:22:00.000-07:00

Learn how to read the market well (it will takes years)
- tools
- define your own trading strategies (with time frame) for various products and market conditions.
- create new system of building and supporting clients

Learn how to manage your clients well
- how to help them manage their portfolio
- portion out your day schedule between market analysis, meeting customers, spending time with family and conducting trainings courses.
- what do they want to know about trading?
- think how your client contact and communicate with you easily
- what the different types of clients. What are those you should avoid.
- How to judge their credit worthiness? Income/ employer/No. of working experience in the current company/past credit records/ face to face assessment
- How would you handle walk in clients.
- Are you comfortable with clients referred by your current clients
-

Don't think you know the market well
- Be conservative in trading
-

Set goals and activities daily
-

How do you want to manage your earnings?
-

What are your goals in years to come?
-

The Joys and Woes of Being a Remisier

2011-07-04T19:47:00.000-07:00

Extracted from http://www1.sim.edu.sg/mbs/pub/gen/mbs_pub_gen_content.cfm?ID=2656&mnuid=92

By Tan Chee Teik

In a bull market, remisiers are so busy taking orders that they have little time to visit the toilet. Many of them became very rich overnight. Now with the prolonged bear market, many are giving up their seats to work in other careers. But the bull cycle will certainly return one day so the younger professionals may want to prepare themselves for the exciting job of a remisier.

THE job of a remisier can be very rewarding or it can be very risky when a client places a huge bet and is unable to pay when the stock falls. A remisier is also known as a commissioned dealer’s representative. He is an agent of a stock broking company and receives a commission for each transaction handled. In French, the word “remisier” means an intermediary.
      A paid dealer’s representative is a direct employee of a stock broking company and his remuneration structure is based on a fixed monthly salary. In some brokerages, dealers are paid a monthly salary and at the end of the year they will receive a bonus based on performance
       The minimum academic qualifications to be a remisier are at least four GCE “O” level credit passes or higher. Apart from this, under the new licensing framework introduced by Monetary Authority of Singapore, MAS, for the Securities and Futures Act (SFA) and Financial Advisers Act (FAA), every potential remisier is required to pass a new modular examination structure known as the Capital Markets and Financial Advisory Services (CMFAS) Examination. Upon passing the various modules, one can apply to MAS for a representative licence under these two Acts.
       There are two main categories of the CMFAS modules, namely, the Regulatory Framework and the Product Characteristics. The Regulatory Framework modules cover the laws and regulations and associated codes, notices, practice notes and guidelines governing the capital markets, and life insurance intermediaries. The Product Characteristics modules cover the various products, tools, and strategies needed to analyse them.
      For a trading representative for securities, one needs to pass the CFMAS module 1A (Rules and regulations for dealing in securities) and CFMAS module 6 (Securities products and analysis).
      Most broking houses do not provide inhouse training on areas of tools and trading strategies with the exception of the launch of a new product by the Singapore Stock Exchange, SGX, or new regulations by MAS. All basic training is expected to be taught during the CFMAS modules courses.
      Some brokerages place the trainee for a week in the backroom to learn about the administrative processes and how to handle the trading system.
      In areas of non-product or regulations-related training, such as trading strategies and trading tools, most trading representatives will upgrade their skills and knowledge by attending additional courses, workshops, seminars or conferences conducted by external parties such as the SGX, Association of Remisiers, Alpha Alliance Training LLP, and others. It is imperative for trading representatives to constantly upgrade their skills and knowledge in order to serve their customers better.
      The exception is when a trading representative’s training is paid for by the broking house as in the case of the Continued Education Programme (CEP). In order for trading representatives to renew the trading licence each year, they are required by MAS to go for continued training annually to earn the relevant points required for their licence renewal. The choice of training topics and logistics will be determined and arranged by the respective broking houses.
      Collin Seow who has been a remisier for three years and is a lead trainer at Alpha Alliance LLP says: “Each trading representative has to set aside a S$30,000 bank guarantee or cash deposit. There is no monthly fee that a trading representative has to pay to the broking house except for the sharing of the commission between him and the broking house. In general, he gets 40 per cent of the commission and 60 per cent goes to the broking house. In addition, the broking house may impose the minimum gross commission (usually S$5,000 monthly) that a trading representative has to meet each month. Failing which, he will be liable to pay for the renewal fees for his licence.”
       Some brokerages set a target of S$60,000 per year as the remisier’s income failing which the remisier has to pay a monthly fee. For example, if the remisier only managed to have an income of S$30,000 that year, he will have to pay S$500 per month as the fees.

Job Satisfaction
      According to a seasoned remisier who wants to be known as John, job satisfaction depends on the individual remisier: “There is enjoyment and job satisfaction if remisiers have learned how to read the market well. They can then help clients to make some money or to avoid pitfalls. The learning curve takes a few years to be be competent in this.”
     Collin says: “I choose to be my own boss instead of being a salaried employee. In this business, I have the flexibility of time and my choice of how I wish to organise my work and serve my customers without being ‘bonded’ by corporate practices or cultures. I am able to arrange my daily schedule among trading, market analysis, meeting customers, spending time with family, and conducting occasional training courses which is my passion to impart knowledge.
      To be able to set my own goals and activities, meeting the customers at the end of the day or even to receive affirmation from them about their satisfactory trades, makes this decision to be my own boss a right choice.”
      Robert, a schoolmate of mine, who has been a remisier for more than 40 years for the same brokerage says: “Every client is your towkay. Sometimes you get brickbats and sometimes you get a bouquet of flowers from them. You need to have good public relations skills to handle your clients.”
      It is true that many remisiers because they think they know the market so well are tempted to trade on their own behalf. According to Robert, he is very conservative in such kinds of trading. He knows of other remisiers who are risk-takers and punt in a big way.
      John observes that the tendency to trade in this line is very strong. Most remisiers and dealers trade using their own accounts and many end up losing money.
      He says: “They trade because they receive a low commission, especially when they are new and do not have a strong customer base. Some brokerages have certain quotas in terms of commission earnings for a six- month to a 12-month period. This can induce a remisier to trade on their own accounts. Consistent poor performers are sometimes asked to leave the company.
      “During very bad months, when most clients stay away from the stock market, in order to make ends meet or to supplement their income, some remisiers will resort to trading on their own. Experienced remisiers can have problems with a shrinking client base over the years due to the ageing or retirement of customers or simply those who have lost money will stop trading. This group of remisiers will revert to trading on their own to make a living.” During Collin’s earlier years as a trading representative, there was a tendency to trade on his own as he analysed and monitored the market daily. The temptation was very great and real. But subsequently, he realised that there is much more in the job than just trading for himself.
      He says: “To be successful, I must build a strong customer base and provide good support for all my clients. Eventually, I made a decision to change my trading styles and created a new system of building and supporting my customers.
      “I implemented new trading styles with a trading time frame for a longer term trades ranging from two weeks to two years. Trading without a powerful trading tool and trading strategies is suicidal, so I researched and invested in a powerful software called MetaStock to design my own trading systems and strategies for various products and market conditions. With new trading styles proven over time, inhouse developed trading systems, and constant review of the trading strategies according to market movements allowed me to guide my customers to implement the same system in their own trades. As I improved, my customers grew with me by making wise and decisive trading decisions.”
      “To continue with this practice,” he says, “I have also created my own blog to share information with my customers and the general public. However, I believe in community networking and sharing of information, so I added a forum and a chat room as part of my blog to encourage my clients and other traders to network and share their knowledge.
       “With the harnessing of technology, I began my own SMS market alerts to my customers and my trainees, pointing them to various market conditions to watch for throughout the trading day. As I constantly work on improving my customer support, I began to move away from the temptation to trade on my own.”

Risks and Benefits
      The remisier’s monthly income may not be stable in comparison to a salaried job. He has to ensure constant and continued trades by the customers. The other major risk is that the remisier is responsible for any losses incurred by the broking company through any securities transaction under the remisier’s customers’ accounts. If the client is unable to pay for the losses or default in payment, the remisier will have to bear the loss.
       John says: “We have to be very sensitive to the risk profile of our clients and always manage our client’s risk exposure conscientiously. Any benefits derived from this job do not outweigh the amount of risks we are taking, especially when commission have been reduced to a meagre 0.5 per cent per trade through us and 0.275 per cent per trade via the Internet.”
      It is estimated that an experienced remisier with over 200 clients can earn from S$4,000 to S$10,000 monthly. In a cold market, he may earn from S$500 to S$3,000. In a hot market, certain remisiers with wealthy clients can earn over S$100,000 a month.

Some Strike It Rich
       Collin remembers the former remisier king, Peter Lim, who struck it rich. In 2007, his reported nett worth was more than S$2 billion, making him the seventh richest man in Singapore. Then, there is the “A-team”, consisting of two cousins who struck gold by seizing control of the China firms’s initial public offering space. They made about US$1.1 billion. Subsequently, the duo diversified their assets into property over the years. Two of their better known transactions are the purchase of foreign worker dormitories in Jurong for S$60 million and the Kovan condominium site in 2007 for S$290 million.
       He says: “There was also news of remisiers who broke the law under the Securities and Futures Act. One remisier was fined S$120,000 on three charges of using the clients’ securities accounts to trade for the benefit of a company’s chief executive officer and a director.”
       John says: “I know somebody who became a remisier almost fresh from the varsity. He worked as a financial analyst for awhile and managed to get to know a few big clients along the way. When he became a remisier the few big clients helped him. He made big profits. But he had many sleepless nights when one client lost over S$500,000. He is a smart fellow and he realises his rich earnings cannot go on indefinitely. Finally, he cut off the few big punters thus reducing his risk exposure. He has enough money to buy two properties.”
      The credit worthiness of new clients is rated based on their income, the employer they are working for currently, the number of years working in the company, past credit records, as well as face-to-face assessment meetings.
      Robert says: “If the new client is introduced by my established client, I’m quite comfortable because my client would know the creditworthiness of that person well. I’ve not taken in any walk-in clients. We can set the limit of trading for a new client. If he is reliable over time, we can increase his trading limit.”
       The growth of the Internet has become a platform for offering a wide range of financial services and products to customers. Collin says: “The Internet allows the investors to research and have access to useful information. It cuts across national boundaries thus globalising the market. On the negative side, Internet trading has reduced the remisier’s commission from 1 per cent in the 1980s to a low of 0.25 to 0.28 per cent. For traditional trading representatives who continue in their old ways of doing business, they will find their earnings dropping tremendously.”
       He adds: “Although the Internet has brought in new ways of trading and giving the investors a wider choice of investment possibilities, it also means exposing the public to new risks. Besides the introduction of Internet banking, the reforms and liberation of Singapore’s financial sector have created a new group of players in the capital markets who are more educated and who benefit greatly from a wider range of products and investment possibilities that promise competitive returns. Because it is cheaper and easier to trade shares over the Internet, the line between investing prudently and gambling recklessly is a gray one and easy to cross over. Day trading by trained amateurs may seem profitable in a bull market, but when the market falls, the casualties will suffer.”

All about REIT - REIT, Business Trust, and Shipping Trust

2011-07-02T08:39:00.000-07:00

Extracted from http://sreitinvestor.blogspot.com/2009/12/all-about-reits-reit-business-trust-and.html

Other than REIT, Business Trust is another investment class that offers investors a way to invest in high yielding cash-generating assets. Shipping Trust is actually a type of Business Trust with assets mainly in ships. Following are brief descriptions of these investment products:

REIT

A Real Estate Investment Trust (“REIT”) raises capital to purchase primarily real estate assets, usually with a view to generating income for unit holders of the fund. It allows individual investors to access real property assets and share the benefits and risks of owning a portfolio of property assets which typically distribute income at regular intervals.

Business Trust

Business Trusts offer investors a new way to invest in cash-generating assets. Business Trusts are business enterprises set up as trusts, instead of companies. They are hybrid structures with elements of both companies and trusts. Like a company, a business trust operates and runs a business enterprise. But unlike a company, a business trust is not a separate legal entity. It is created by a trust deed under which the trustee has legal ownership of the trust assets and manages the assets for the benefit of the beneficiaries of the trust. Purchasers of units in the business trusts, being beneficiaries of the trust, hold beneficial interest in assets of the Business Trust.

As of this writing, CitySpring Infrastructure Trust and Hyflux Water Trust are 2 Business Trusts listed in SGX that owns infrastructure assets.

Shipping Trust

A shipping trust is registered as a business trust, and its business mainly involves acquiring ships and leasing them out to shipping companies for cash income.

Currently there are 3 shipping trusts listed in SGX, namely the Pacific Shipping Trust, First Ship Lease Trust, and Rickmers Maritime. Compared to their REITs cousins, the shipping trusts are not doing as well recently. Their stock prices are still relatively depressed, probably because they are deemed as being riskier with their association to the volatile shipping cycle. The depressed prices in turn means higher yield to compensate for the risk in holding them.

Similarities
Following are some similarities between a REIT and a Business Trust:

Unlike a listed company, the dividend payout of both REIT and Business Trust are from the operation cash flow rather than the accounting profit. As such, for a listed company, appreciation or depreciation of assets will affect its accounting profit, and will in turn impact the dividend payout. REIT and Business Trust, on the other hand, can still maintain the same dividend payout even if there is appreciation or depreciation of assets as these are just accounting profit/loss and not loss in cash income.
No tax on individual investors on the distribution income.
Assets they own are usually highly expansive and requires some form of debt financing for the acquisition.
Most of them have a sponsor that injects assets into the trust based on a right of first refusal agreement.

Differences
Following are some differences between a REIT and a Business Trust:

REIT is legislated under the Code on collective Investment Schemes, while the Business Trust is under the The Business Trusts Act.
The REIT has a separate Trustee and asset Manager, while for a Business Trust, these roles are fulfilled by a single entity. The Trustee-Manager of Business Trusts thus has dual responsibility of safeguarding the interests of unitholders and managing the Business Trusts. This stems from the difficulty in apportioning the fiduciary responsibility between two roles given the nature of Business Trusts as active enterprises.
The gearing limit for REIT is 35% without corporate rating, and 60% if it has a rating. There is no gearing limit for Business Trust. Thus it is not surprising to find Business Trust with debt being equal or even few times the value of its total assets.
Assets of REITs are restricted to real estate. Business Trust has no such restriction, and may own a variety of cash generating assets including ships, gas stations, power stations, water treatment plants, etc.
REIT has to maintain a minimum payout ratio of at least 90% of its distributable income. A Business Trust does not have this restriction, but it will usually maintain a high payout ratio.

REIT or Business Trust?
This is a question that cannot be generalized because different REITs and Business Trusts can have different levels of quality and risks. Even among the Business Trusts, we cannot compare apple to apple a Shipping Trust and an Infrastructure based Trust. Having said that, because of some distinct differences in their nature, the are some factors we can consider when deciding between a REIT or a Business Trust.

As a Busines Trust has no gearing limit, it can potentially have a gearing of 100% or more. So when you have a REIT of 20% gearing and a Business Trust of 300% gearing, both giving the same yield, what should be the decision? Of couse some may argue that having no gearing means that the Business Trust can potentially grow much faster by debt. Well this boils down to the risk tolerance of an individual, whether you are looking for high risk high return kind of investment, or otherwise.
The minimum payout ratio for REIT is 90%, while Business Trust has no such restriction. So Business Trust may have a higher element of surprise in having a drastic cut of payout ratio in times of difficulties. Case in point, Rickmers Maritime. Due to the current difficult operating environment, the Trust has accelerated its cash retention efforts. The distribution payout for 2Q2009 and 3Q2009 was 13% of distributable income compared with 46% in 1Q2009 and an average of 67% for FY2008. Compare this with CDL H-Trust, which cuts the payout ratio from 100% to 90% earlier this year.

Signs of market uptrend reserval

2011-06-16T07:21:00.000-07:00

- Consecutive 3 day of positive uptrend

- US market up on previous day

- Blue Chip move up first

- Stock trending up with High volume

Dollar Index, Stock, Oil and Previous Metal Co-relationship

2011-06-14T03:04:00.000-07:00

Extracted from http://forum.channelnewsasia.com/viewtopic.php?p=4403888&sid=94cdbd73aba2ff73674827c62db2afc6 written by Dust

When US economic data is good, dollar & Dow gain, else dollar & Dow drops.

When Dollar Index drops due to USD devaluation (QE, inflation etc), Oil goes up, previous metal, commo & stocks goes up.

When Dollar Index drops due to economic woes, Oil will NOT go up. This is because demand is expected to go slow.

When Dollar Index drops, Oil, commo, Euro, Dow all go up. Until Oil goes up too high, Dow will start to drop, so it drop together with Dollar Index. This is because a high oil is bad for companies, bad for stocks.

For precious metal, Gold & Silver will not react the same. When Dollar Index drops due to economic woes, Gold may go up as it is viewed as alternative safe haven, but not Silver. In a troubled economy, Silver will fail as an industrial metal.

Candlestick patterns - http://thepatternsite.com/CandleVisual.html

2011-06-06T22:48:00.000-07:00

8 to 13	8 new price lines	10 new price lines	12 new price lines	13 new price lines
A	Abandoned baby, bearish	Abandoned baby, bullish	Above the Stomach	Advance block
B	Below the Stomach	Belt hold, bearish	Belt hold, bullish	Breakaway, bearish	Breakaway, bullish
C	Candle, black	Candle, short black	Candle, short white	Candle, white	Concealing baby swallow
D	Dark cloud cover	Deliberation	Doji, dragonfly	Doji, gapping down	Doji, gapping up
	Doji, gravestone	Doji, long legged	Doji, northern	Doji, southern	Doji star, bearish
	Doji star, bullish	Doji star, collapsing	Downside gap three methods	Downside Tasuki Gap
E	Engulfing, bearish	Engulfing, bullish	Evening doji star	Evening star
F to H	Falling 3 methods	Hammer	Hammer, inverted	Hanging man	Harami, bearish
	Harami, bullish	Harami cross, bearish	Harami cross, bullish	High wave	Homing pigeon
I to K	Identical three crows	In neck	Kicking, bearish	Kicking, bullish
L	Ladder bottom	Last engulfing bottom	Last engulfing top	Long day, black	Long day, white
M - N	Marubozu, black	Marubozu, closing black	Marubozu, closing white	Marubozu, Opening Black	Marubozu, Opening White
	Marubozu, white	Matching low	Mat hold	Meeting lines, bearish	Meeting lines, bullish
	Morning doji star	Morning star
O to R	On neck	Piercing pattern	Rickshaw man	Rising 3 methods
S	Separating lines, bearish	Separating lines, bullish	Shooting star	Shooting star (2 lines)	Side by side white lines, bearish
	Side by side white lines, bullish	Spinning top, black	Spinning top, white	Stick sandwich
T	Takuri line	Three black crows	Three inside down	Three inside up	Three line strike, bearish
	Three line strike, bullish	Three outside down	Three outside up	Three stars in the South	Three white soldiers
	Thrusting	Tri-star, bearish	Tri-star, bullish	Tweezers Bottom	Tweezers top
	Two black gapping	Two crows
U - V	Unique three-river bottom	Upside gap three methods	Upside gap two crows	Upside Tasuki gap
W	Window, falling

Short form in Remarks column of the Share prices

2011-06-06T21:36:00.000-07:00

Extracted from http://share.sg/2010/08/19/cd-cum-dividend-what-do-these-remarks-beside-the-share-means/
BI=Buy In Only

BI is normally used in the buy-in market. This is normally for people who short sell the shares but they never cover in the same day. Therefore, when the time comes for settlement, SGX will buy-in those shares for them in the market to cover their short position.

CA=Any combination of Cum remarks
CB=Cum Bonus

The share is generally known as cum-bonus in case where the purchaser will receive the current bonus. A stock trades cum-bonus up until the ex-bonus date. Before a bonus share is issued, the board of directors is supposed to propose the bonus during a board meeting. This issue will be approved in the company meeting. Then the company directors can decide whether they can give shares to particular shareholders. The date of the issue of shares is known as record date.

CD=Cum Dividend

Cum dividend means “with dividend.” When a buyer of a security is entitled to receive a dividend that has been declared, but not paid. A stock trades cum-dividend up until the ex-dividend date. On or after this point, the stock trades without its dividend rights. When you see CD next to a stock’s name on the Singapore Exchange (SGX) website, this tells you the firm will be paying out dividends in the near future, and it’s your pre-empt notice.
You should continue reading about important dates in the dividend process, and take a look at the period transiting from Cum Dividend to Ex-Dividend.

CE=Cum Entitlement

It might be an entitlement to capital reduction or cash distribution or free shares given out by the company.

CI=Cum Interest

Applies to interest rate securities only, and in this case, interest (or coupons) is for SGX-listed bonds. Securities trade on the basis that the securities carry an entitlement to the next interest payment. The purchaser of securities cum interest is entitled to the next interest payment. Securities are traded on a cum interest basis until the Ex Interest date. When a bond is trading at CI, it means that it is going to give interest to its holders.

CO=Cum Offer
CR=Cum Rights

Issue of rights where the offeree can choose to take up the rights offered, let them lapse, or trade them on the market. Privilege granted to shareholders to buy new shares in the same company.

DL=Delisted

The removal of a listed security from the exchange on which it trades. Stock is removed from an exchange because the company for which the stock is issued, whether voluntarily or involuntarily, is not in compliance with the listing requirements of the exchange. Listing requirements include minimum share prices, certain financial ratios, minimum sales levels, and so on.

H=Trading Halt

A temporary suspension in the trading of a particular security on one or more exchanges, usually in anticipation of a news announcement or to correct an order imbalance. A trading halt may also be imposed for purely regulatory reasons. During a trading halt, open orders may be canceled and options may be exercised.

J=Adjust

Indicates that the equity derivative series is associated with an underlying security of an issuer that has declared a change to its ordinary share capital structure which is effective prior to the recommencement of trading in those securities on that day. Trades entered into the associated derivatives series will be on an adjusted basis with the extent of the adjustment published by SGX after trading closes on that date.

PL=Pending Listing

In the process of adding a listed security on the exchange on which it trades.

Susp=Suspended

A stoppage in the trading of a security for an extended period of time that normally occurs when there is a lack of material financial information on the security. Once the security is suspended, shares of that security cannot be traded on the market until the suspension is lifted or lapses. The exact amount of time for the suspension will be determined on on a case-by-case basis.

WI=When Issue

When issued basis. This is normally for IPOs when it is being listed and people trade it on WI basis. Which means, those shares had yet to be credited into the CDP account but they had already been issued with the shares. Nowadays, IPO shares seldom trade on WI basis and you might want to ignore this remark.

XA=Any combination of Ex remarks
XB=Ex Bonus

Those shares that are bought before the record date are known as cum-bonus. This creates a situation where the investor should buy the bonus shares. Just opposite to this, those shares which are sold after the record date forms the ex-bonus. No bonus shares will be issued out for stocks bought after this date. The value of the shares under the cum-bonus will have high value as compared to ex-bonus.

XD=Ex Dividend

A stock trades ex-dividend on or after the ex-dividend date. At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. For example, if Company A’s XD is Jul 13.
This means if you own the stock on or before Jul 12, you would get the 1.1-cent dividend as the stock would be trading CD then.
If you own the stock on Jul 13 or after, you would not be entitled to the dividend.
Investors who sell their shares on or after the XD or ex-dividend retain their rights to the dividends.After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend.
You should continue reading about important dates in the dividend process, and take a look at the period transiting from Cum Dividend to Ex-Dividend.

XE=Ex Entitlement

Shareholders who buy shares on this day onwards are no longer entitled to capital reduction or cash distribution or free shares given out by the company.

XI=Ex Interest

Opposite to Cum Interest. SGX-listed bonds trade as XI from the Ex Interest date onwards. Buyers of bonds on and after the Ex Interest date are not entitled to receive associated interest.

XO=Ex Offer
XR=Ex Rights

Shares of stock that are trading but no longer have rights attached because they have either expired, been transferred to another investor or been exercised. The rights originally assigned to the stockholder are, for whatever reason, no longer valid or no longer applicable to the stock.

Chart Patterns - http://thepatternsite.com/

2011-06-06T03:21:00.001-07:00

Big M	Big W	Broadening bottoms	Broadening formations, right-angled and ascending	Broadening formations, right-angled and descending	Broadening tops
Broadening wedges, ascending	Broadening wedges, descending	Bump-and-run reversal bottoms	Bump-and-run reversal tops	Channels	Cup with handle
Cup with handle, inverted	Diamond bottoms	Diamond tops	Domed house and three peaks	Double bottoms, Adam & Adam	Double bottoms, Adam & Eve
Double bottoms, Eve & Adam	Double bottoms, Eve & Eve	Double tops, Adam & Adam	Double tops, Adam & Eve	Double tops, Eve & Adam	Double tops, Eve & Eve
Flags	Flag, high and tight	Gaps	Head-and-shoulders bottoms	Head-and-shoulders complex bottoms	Head-and-shoulders tops
Head-and-shoulders complex tops	Horn bottoms	Horn tops	Island, long	Island reversal, bottom	Island reversal, top
Measured move down	Measured move up	Pennants	Pipe bottoms	Pipe tops	Rectangle bottoms
Rectangle tops	Roof	Roof, inverted	Rounding bottoms	Rounding tops	Scallops, ascending
Scallops, ascending and inverted	Scallops, descending	Scallops, descending and inverted	Simple ABC Correction	Spikes or Tails	Three falling peaks
Three peaks and domed house	Three rising valleys	Triangle, ascending	Triangle, descending	Triangle, symmetrical	Triple bottoms
Triple tops	V bottoms	V bottom, extended	V tops	V top, extended	Wedge, falling
Wedge, rising

Sectors performance in QE 1 and QE 2

2011-06-03T21:23:00.000-07:00

When the market was in correction mode, the defensive sectors of Health Care , Consumer Staples and Utilities outperformed. And when the market was in rally mode, the cyclical sectors of Consumer Discretionary , Industrials , Technology , Materials and Energy outperformed. As for Financials at the heart of the crisis, their path has been unique.

But as for sector performance coming out of the latest QE2 rally phase, a decidedly more blended picture has presented itself. While the Utilities sector is continuing to behave as expected by trailing all other sectors during the QE2 rally, both Consumer Staples and Health Care have been much more in the performance mix with the cyclical sectors. This suggests that these defensive sectors may not be set to enjoy the same outperformance post QE2 as they had in the past.

The Top 10 Things That Separate Pros From Amateurs

2011-05-24T18:08:00.000-07:00

By Jared Levy, Editor, WaveStrength Options Weekly

Dear Reader,

I've just returned from our Global Opportunities Summit in Las Vegas and my mind is swirling with ideas for Smart Investing Daily. I not only had the pleasure of meeting many of you, but also got the chance to have some in-depth conversations with many of my fellow editors from around the country.

At the summit, I noticed that there were common threads that wove their way through the minds of both the speakers and attendees.

Our goal at Taipan Publishing Group is to not only help identify potential investment opportunities, but close the gap between what has made many professional traders successful and what the average investor needs to know.

I assembled 10 of the most important techniques and mantras you should use to take your trading and investments to the next level.

In coming issues, you can be sure I will take each one and more into great detail, but this should at least get you started.

No. 10: Hedge Your Bets/Diversify

If you are an options trader, you can use spreads to reduce your investment's exposure to the overall market. Some option spreads can not only greatly reduce how volatile your account is, but they actually can put the probability of success on your side.

Diversify your investment portfolio not only with stocks in different sectors, but also with BETA! Beta tells you how your stock will typically react to the market. If all your stocks have high betas, your account may be susceptible to just as much if not MORE volatility than the market, even if you bought stocks in different sectors.

No. 9: Plan Your Risk Ahead of the Trade

Have a maximum downside dollar and/or percentage risk spelled out ahead of your investment, not after the fact.

Use stop-losses, put options or spreads to solidify your plan if you understand how to use them.

Don't exceed your comfort zone; this may cause irrational decisions in your trade. In other words, don't make your investments too large in any one security.

No. 8: Be a Contrarian

It's usually better to buy on rumor, sell on news.

By the time everyone is talking about it, it might be too late.

Don't be scared to think "outside the box."

No. 7: Sell or Protect While the Trend Is Still Strong

It's much easier to sell when a stock is rising in value vs. when it's in free fall.

Remember, insurance is cheaper before you have an accident, so if you are an options trader, buy your puts when the market is complacent, not panicking.

Think of a climber who is 30 yards from the summit of a mountain and runs out of oxygen. He may touch the top, but he won't get down. This is analogous to a stock that has been rallying for a long time and you take no action to exit. While you may see the top in the stock, stocks can change direction frequently, and most investors don't get to sell the highest high!

No. 6: Learn From Your Losses, NOT Only Your Profits

Your losses can tell you just as much if not more about your trading personality.

Sometimes just limiting losses can turn an unsuccessful trader into a thriving one, or at the very least, allow you to live to trade another day.

No. 5: Be Consistent in the Types of Issues You Trade

Look for similarities in the behaviors of your securities; this will help you to find the patterns you are looking for and will help minimize errors. These attributes include ATR, Price, Volatility, Sector, Chart Patterns.

Remember that most professionals are specialists in a certain group of stocks or sectors.

If it feels uncomfortable in a trade, it is probably not for you.

No. 4: Think Three Steps Ahead

Have a game plan for all possible outcomes in a trade (most retail investors just focus on the best outcome) and have alternatives for a flat investment as well as one that begins to go against you!

The analogy here is to pretend that you're playing chess or poker; in both games you are thinking about what you might have to do if your opponent (the market) makes a move that puts you in danger. Investing is no different.

No. 3: Trust Yourself

Professionals are confident in their abilities and their plan.

NO ONE knows exactly what you are thinking; only you can control your emotions.

Your risk tolerance and views on the trade are completely unique; therefore even though we can offer trade ideas and theses, you must execute them in your own way and use your individual money management to find how much of your account you will invest.

No. 2: Be Adaptable, Yet Adept in Your Strategy

Be able to admit you're wrong and change direction when needed.

Don't apply a strategy you are NOT COMPLETELY comfortable with.

No. 1: Ask Questions

If there is something you don't know, always ask.
If there is any piece of the trade that didn't make sense, don't trade it with real money until you are able to quantify it. (Many brokers offer paper-trading platforms to test out new strategies.)
The only stupid question is the one that is not asked.
Professionals were not born that way; they too had to learn just like you!

How to use Bollinger Bands to preempt market moves

2011-05-19T08:15:00.000-07:00

In a congesting market
Upper and lower bands act as S/R
Bands are usually horizontal
When bands narrow and constrict, watch for breakout! Watch for volume too.
Prices will break out into the band.

In a trending market
Bands open up to signal start of a move
Prices trade along the upper/lower bands (sloping), not S/R
When prices trade outside the band, it may be the end of the move soon, and prices will usually move sideways for a while to get back inside the band
Midband can serve as S/R
Rounded top/bot signals end of move (not trend)
The opposite side of the BB tends to curve inwards first in signaling end of move
When bands close up – possible congestion
When bands continue to slope – resumption of trend

Understand the Investment Clock

2011-05-18T23:44:00.000-07:00

The clock tells you the most appropriate investment medium, considering the prevailing economic indicators such as interest rates, commodity prices and inflation. It shows that the share cycle is followed by the real estate and then the fixed interest cycles. The investment clock has proved accurate in reflecting the market forces that drive the various investment cycles. And the order in which they occur.

Looking at the clock, twelve o'clock is the boom and a rapid increase in the demand for real estate results in property prices rising. Often property prices rise by 20% per annum during these boom years.

As property purchases are primarily funded by borrowing, the increased demand for funds causes the cost of funds, that is interest rates, to rise. As interest rates rise, companies find it harder to make profits, and this together with the fact that the booming property market and fixed interest investments seem more attractive, causes share prices to fall or at least stagnate. As property prices tend to boom at these times and because interest rates rise, the rapid growth of the property market cannot be sustained for more than a few years. Property prices stagnate and even fall.

At about 3 o'clock in the investment clock, the share market is usually doing little and offers few prospects for investors and interest rates are too high to make borrowing for property an attractive option. This is the fixed interest or cash part of the cycle when cashed up investors can take advantage of the high interest rates on offer to lenders by way of bonds, debentures and cash deposits in financial institutions.

Other investors just try and battle on paying more interest on their borrowed funds.

High interest rates slow the economy and lead us into the recession.

This brings us down to six o’clock; in the depths of a recession and as mentioned Australia has a recession of varying magnitude every seven to nine years. Now investors are either too scared, or cannot afford to borrow money and in time interest rates slowly start falling. Also during these times companies are forced to become leaner and increase productivity. These measures and the slowly improving economy translate into increased company profits and this gradually stimulates share prices to recover.

We are now at about 7 o'clock. At this point in the cycle most people have left the market having sold their shares as a result of the economic downturn and retreated to cash, fixed interest or even property. Interest rates range down to historically low levels and eventually the point is reached where long term investors see value in the market and start to accumulate the better performing stocks. The seeds of the next recovery are sown and eventually equity and commodity prises will rise.

Understanding the cycle and the cyclical relationship between the share, property and fixed interest markets is critical if you want to maximise the return on your investment dollar, with the minimum of risk.

You may well ask - why do economic cycles occur in the first place? Why doesn't our market driven economy find a nice equilibrium? The simple answer is that the world economy is a collection of many nations each at their own individual point of the economic clock. And each nation is made up of millions of people each making their own financial decisions as a reaction to, or in the expectation of, other people’s decisions. The sheer momentum of all these economies means that they always over swing the mark, resulting in cyclical economic movements.

If the economic clock is well understood and the benefits of being a countercyclical investor are evident, why doesn't everyone make a killing? The simple reason is human nature. Two factors drive the share market: greed and fear. As the value of shares in the share market rises, most investors want a piece of the action and will buy more and more shares. This drives the prices up and leads to further buying. Such a market is known as a bull market. Everyone is happy, as long as the prices keep rising.

However, we know that such activity cannot continue indefinitely. The problem is that the emotion of greed is often stronger than rational thought. Conversely, when prices start falling, uncertainty sets in and most shareholders begin selling their shares before the price falls too far. As selling intensifies, share prices continue to fall. Before too long panic sets in as most investors try to divest themselves of their share holdings.

This is known as a bear market.

Although investors who keep their stocks should be able to sell them for a higher price once the next cycle comes around, the fear of loss forces many investors to sell their shares. Keeping a level head and understanding the market will give you a distinct advantage. Think how much profit you could make if you stood away from the crowd and were in a position to buy when everyone else is selling, and to sell when the pack wants to buy.

My remark:
I do not know the date of the article. The writer mentioned that the time was around 7 o'clock in the article. It may correspond to the state of economy at the time of writing.

Source: http://www.paritech.com.au

Where are we now?

2011-05-18T23:15:00.000-07:00

It seems that the economy of most developed countries moves in a regular pattern, known as the boom and bust cycle. I know that I'd like to know what time it is now so that I could prepare for what's likely to occur in the near future. While the clock is not foolproof, it does demonstrate indicators to watch out for.

Application

This article will be of interest to:
Business Owners who want to under stand more about how the economy works and how they might be affected at different stages of the cycle.
Private Investors who want some independent guidance on when is the right time to own stocks, property and fixed interest deposits.
Real Estate Investors who need to understand why property prices move in cycles and how the comment that real estate prices only ever increase is not true.

What Is The Economic Clock?

The economic clock, pictured above, demonstrates that as an economy moves through its economic cycle there is a time to buy certain types of investments and possible a time not to buy. Notice that I don't say 'sell', because one of the most important investment habits to develop is a long-term investment horizon.
The economic clock is not a signal about what to buy to quickly become wealthy. Rather, it identifies that the return a particular investment will generate depends on what time it is in the economic cycle.
For example, if it was two o'clock then neither share or property is likely to be the best investment option.
To understand the process of the economic clock, let's go through one full cycle.

The Six O'Clock Recession

Recessions mark the peak of a downward swing in an economic cycle.

A recession is defined as a period of two or more successive quarters of decreasing production. Production is usually measured in terms of Gross Domestic Product (GDP), so in layman's terms, any two consecutive periods of negative GDP will constitute a recession.
Recessions are characterised by high unemployment, caused by employers shedding staff as production levels fall, cutting profitability and the need for labour.
With less employment comes a drop in the average weekly earnings and with fewer dollars to spend, consumers demand less, resulting in even lower consumption.
Historically Australia has entered a period of recession every seven to nine years with our last recession in 1990.

Recovery 'Till Midnight

A recovery from recession begins with increased government spending (known as fiscal policy) and control of interest rates (known as monetary policy).
More spending on government projects increases the demand on private sector businesses, which in turn look to employ more staff to cope with increased production needs. Lower interest rates prompt businesses to borrow and invest in capital projects.
Market analysts believe the beginning of the recovery phase is an excellent time to invest in the stockmarket. Companies which survived the recession will be efficient and well placed to obtain higher earnings from growth in target markets resulting in higher share prices and bigger profit distributions.
Share prices move through a period of gradual increases as the hour hands pass between six o'clock until about eleven o'clock when those who have missed out on the stockmarket gain start buying leading to more aggressive market highs. A frenzy begins which marks the beginning of the end of the recovery cycle, which peaks when the economy is booming.
Just before midnight a phenomenon known as 'the greater fool theory' begins. The greater fool theory suggests that no matter what price an investor pays for a share, someone (the greater fool), with less education and less understanding of the market, will buy it at a higher price. Eventually the price rises to a figure when the greatest fool buys because s/he cannot find anyone to buy it at a higher price. When the greatest fool buys the market has reached its peak and is set for a correction.
You know you are in the 'great fool' period when you hear that investors with little or no knowledge of the fundamentals of investing believe they can't lose.

Midnight Boom Before The Impending Correction

Just as the greatest fool has purchased articles appear in the media about how wonderful the stockmarket is and how the good times are never going to end. In recent times stockbrokers coined the term 'new economy' stocks only to see traditional economic theory pierce the hype and bring stock values down.
Well before the clock strikes midnight the wise investors have exited stocks and are looking for the next opportunity. They have left because they understand that there is likely to be a correction in the market, since share prices cannot be justified by traditional stock valuation methods, such as asset backing per share or earnings multiples.
As investors leave the market, supply (sales) become higher than demand (purchasers) triggering a sell off and a slump in share prices. Investors who were too slow (or greedy) are burned, particularly those that have leveraged (via margin lending facilities) and the panic begins as people scream 'sell'.

Property 'Till Three O'Clock

The smart investors that 'got out' at the top move into property with reliable 'bricks and mortar'.
Extra demand in property pushes demand above supply and results in higher prices.
This itself isn't a problem, except that the government sees the economy is overheating and looks to introduce measures to enable a 'soft landing' through increasing interest rates to flatten demand by consumers.
With higher interest rates comes less profit in real estate since most investors have leveraged their property purchases. Rises in interest rates continue until it is no longer viable for purchasers to continue investing in property and soon there are more sellers than buyers. Property prices, like share prices, correct.
There is trouble on the way.

Decline Back To Six O'Clock

Decline begins as business confidence begins to fall. Investors find little value in either stocks or property and with impending trouble on the horizon fixed interest securities become very popular again.
Lower business confidence means that new capital ventures are postponed.
Less spending and higher interest rates result in lower demand, which results in less production. With fewer sales there is a squeeze on earnings, resulting in profit downgrades; economic rationalisation becomes a hot topic in the boardrooms.
The economy slows to the point where productivity stalls and then declines. When this happens for two periods in a row, the economy is said to be in a recession.

Pros and Cons of Fundamental and Technical Analysis

2011-05-13T21:23:00.000-07:00

1. Fundamental analysis examines the health of a company using balance sheet data, revenue projection models and just plain common sense.
A fundamental analyst might say, "I'm buying XYZ because they have little debt, great cash flow and big profit margins, and everyone around the world seems to love their widgets more and more every day."

Pros
    •    Most of us agree with this thinking and can gather the data fairly easily.
    •    It is generally a smart practice to invest in a company with sound financials that is witnessing material revenue growth.
Cons
    •    The problem with fundamental analysis is that you are still making predictions about the future that may not come true.
    •    Fundamental analysis can be a lengthy, complex process.
    •    Remember that even if a stock looks financially healthy and is relatively cheap compared to its peers, that doesn't mean that it will always rise in value. A stock's price is also determined by the supply and demand of its shares.

2. Technical analysis looks at a chart of a stock's price movements. Analysts look for patterns to determine future movements in the stock. There are hundreds of "indicators" that can help find buy or sell points, or price trends and momentum.
Indicators have been created by investors over the years. They take the data in the chart and apply a mathematical formula. This produces a line, dot, band or other visual cue for the analyst to interpret.
A technical analyst might say, "I'm buying XYZ because the stock price is above its 50- and 200-day moving averages and has strong momentum at the moment."
Pros
    •    Patterns in price and volume can help us identify trends. They can also find price levels where investors tend to buy or sell.
    •    This analysis goes quickly once you know and understand the indicators you want to use.
    •    Technical analysis can help you rationalize the price you are paying. In other words, if you researched a company and simply bought it without looking at a chart, you have no way of knowing where the stock is in relation to its past.
Would you want to buy a stock that is at an all-time high and has just risen over 40% in the past month? What if you then looked at a chart and noticed that it had done that three times in the past, and that each time it hit a new high it then sold off 20%?
Cons
    •    There is an overwhelming amount of different indicators out there. It is tough to find the ones that are most effective for your style of trading.
    •    It takes skill and experience to identify trends and patterns.

What technical indicators should you use?
There are dozens of different indicators to choose from. Some are better than others.
I suggest that you focus on some of the more commonly used ones for your strategy. I believe that basic indicators, followed by many investors, are more reliable than more obscure methods.
Such common indicators include moving averages, volume, Fibonacci levels, Bollinger Bands, trend lines, ATR, MACD and Stochastics.

Hints and Tricks
Support and resistance levels give us price ranges to enter or exit a stock. Sometimes it helps to draw a trend line (like the one in black above) to find those levels.
Average True Range (ATR) and volatility help us measure how much a stock "normally" moves and if it is behaving oddly. This indicator may be either showing you an opportunity or warning you that there might be an underlying problem.
Moving averages help identify trends. A simple technique is to make sure a stock is above its 50- and 200-day moving averages if you are going long. On the chart above, these are the orange and red lines. Once the stock price gets below the 50-day moving average, it may be time to sell.

Summary
I believe that technical analysis works mainly because so many people believe in it and use it. It almost becomes a self-fulfilling prophecy.
It has been used in some form or fashion for thousands of years, dating all the way back to Chinese rice farmers. The patterns and indicators sometimes seem unusual, but amazingly, many still manage to find their way into a stock's chart. You would be amazed at what pops up.
Use a combination of both types of analysis. You would be foolish to omit one or the other.
Remember that there is always more than one solution

Jared A. Levy

The Fed model

2011-05-06T08:15:00.000-07:00

To help keep inflation manageable, the Fed watches inflation indicators such as the Consumer Price Index (CPI) and the Producer Price Index (PPI). When these indicators start to rise more than 2-3% a year, the Fed will raise the federal funds rate to keep the rising prices under control. Because higher interest rates mean higher borrowing costs, people will eventually start spending less. The demand for goods and services will then drop, which will cause inflation to fall.

A good example of this occurred from 2001 to 2002, when the Fed cut the federal funds rate to 1.25%. This greatly contributed to the economy's 2003 recovery. By raising and lowering the federal funds rate, the Fed can prevent runaway inflation and lessen the severity of recessions. When interest rates are rising, both businesses and consumers will cut back on spending. This will cause earnings to fall and stock prices to drop. On the other hand, when interest rates have fallen significantly, consumers and businesses will increase spending, causing stock prices to rise.

Interest rates also affect bond prices. There is an inverse relationship between bond prices and interest rates, meaning that as interest rates rise, bond prices fall, and as interest rates fall, bond prices rise. The longer the maturity of the bond, the more it will fluctuate in relation to interest rates. One way that governments and businesses raise money is through the sale of bonds. As interest rates move up, the cost of borrowing becomes more expensive. This means that demand for lower-yield bonds will drop, causing their price to drop. As interest rates fall, it becomes easier to borrow money and many companies will issue new bonds to finance expansion. This will cause the demand for higher-yielding bonds to increase, forcing bond prices higher. Issuers of callable bonds may choose to refinance by calling their existing bonds so they can lock in a lower interest rate.

The Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth. Conversely, when inflation is threatening, the Fed reduces the risk by shrinking the supply.

To implement its primary task of controlling money supply, there are three main tools the Fed uses to change bank reserves:

    1.    A change in reserve ratio is seldom used but is potentially very powerful. The reserve ratio is the percentage of reserves a bank is required to hold against deposits.A decrease in the ratio will allow the bank to lend more, thereby increasing the supply of money. An increase in the ratio will have the opposite effect.

    2.    The discount rate is the interest rate that the central bank charges commercial banks that need to borrow additional reserves. It is an administered interest rate set by the Fed, not a market rate; therefore, much of its importance stems from the signal the Fed is sending to the financial markets (if it's low, the Fed wants to encourage spending and vice versa). As a result, short-term market interest rates tend to follow its movement. If the Fed wants to give banks more reserves, it can reduce the interest rate that it charges, thereby tempting banks to borrow more. Alternatively, it can soak up reserves by raising its rate and persuading the banks to reduce borrowing.

    3.    Open-market operations
Open-market operations consist of the buying and selling of government securities by the Fed. If the Fed buys back issued securities (such as Treasury bills) from large banks and securities dealers, it increases the money supply in the hands of the public. Conversely, the money supply decreases when the Fed sells a security. Note that the terms "purchase" and "sell" refer to actions of the Fed, not the public. For example, an open-market purchase means the Fed is buying but the public is selling. Actually, the Fed carries out open-market operations only with the nation's largest securities dealers and banks, and not with the general public. In the case of an open-market purchase of securities by the Fed, it is more realistic for the seller of the securities to receive a check drawn on the Fed itself. When the seller deposits it in his or her bank, the bank is automatically granted an increased reserve balance with the Fed. Thus, the new reserves can be used to support additional loans. Through this process, the money supply increases.

The monetary expansion following an open-market operation involves adjustments by banks and the public. (To find out more, see Formulating Monetary Policy.) The bank in which the original check from the Fed is deposited now has a reserve ratio that may be too high. In other words, its reserves and deposits have gone up by the same amount; therefore, its ratio of reserves to deposits has risen. To reduce this ratio of reserves to deposits, it chooses to expand loans.  When the bank makes an additional loan, the person receiving the loan gets a bank deposit. At this stage, when the bank makes a loan, the money supply rises by more than the amount of the open-market operation. This multiple expansion of the money supply is called the money multiplier. Bank loans and purchases of securities are described as bank credit. It is the existence of bank credit that makes the money stock larger than the monetary base, also known as "high-powered money". High-powered money consists of currency and bank deposits at the Fed.

Are Singapore REITs a Good Investment?

2011-04-20T17:13:00.000-07:00

Extracted from http://www.lioninvestor.com/are-singapore-reits-a-good-investment/

This article on Singapore Real Estate Investment Trusts (S-REITs) is long overdue as I already had plans to pen down my thoughts on this topic more than a year ago.

Initially, I wanted to title this post “The Disastrous Singapore REITs Model” but decided otherwise.
So why do I think they are a disaster?

A REIT is an instrument that allows small investors to have indirect access to real estate investment at an affordable cost. Through this investment, you will be entitled to a steady stream of dividends (distributions) from the rental income.

From the developer’s point of view, it offers them a chance to divest of their assets and recycle their capital into new projects.

REITS has been available in other more mature markets prior to the first Singapore REIT listing of CapitaMall Trust (CMT) in 2002. Ascendas-REIT (A-REIT) followed in November 2002 and this was followed by a steady stream of other REITs.

A REIT is intended to be a defensive instrument as it relies on revenues generated from income producing properties held in its portfolio. As rentals are more or less constant, investors are assured of a steady stream of dividends.

A REIT manager earns fees by charging a management fee based on the assets under management (AUM), as well as associated fees for adding/selling properties from its portfolio. The higher the AUM, the more fees he would earn. Needless to say, REIT managers are always on the lookout to grow their portfolio. Which is what many of them did.

It is only possible to justify (to investors) adding more properties to a portfolio if the acquisitions are yield accretive. This means the new properties that is being added to the portfolio must give a higher rental yield than the yield on the REIT itself (at the current stock price).

In 2004 to 2007 when the stock market was booming, many of the REITs were trading at a high valuation and had yields that were quite low. So it was easy for a lot of REITs to go on an acquisition spree using either debt or equity (or a combination of both) to finance their purchases. Some of them used too much debt which resulted in highly geared balance sheets.

As most of the REITs managers were just benchmarking their gearing levels to their peers at that time, everything seemed normal so everyone just concentrated on growing their AUM. Every acquisition was followed by a press release highlighting the good news about how so-and-so REIT has grown and is now bigger. Come reporting time, they could also put a positive spin on the results by reporting higher earnings or distributions (in absolute $ terms) even though there could be just a marginal increase in the distribution per unit (DPU).

Investors are also happy as they were enjoying both their dividends and capital gains from high valuations.

The reality check came in 2008 after Lehman Brothers collapsed. Due to writedowns on the property, many of these REITS discovered that their gearing had become untenable to the banks. It was a very challenging time for them as the debt market was practically frozen up at that time as well.
In the end, most of them with over-geared balance sheets had to raise cash in the form of equity. Raising equity at a time when the share price is low can be very dilutive to shareholders who are not part of the equity raising process.

One example is when you do a share placement to preferred investors.
Another example could be retirees who had invested all their life savings in REITs for the dividend streams and had no more money to take up their Rights issue. Perhaps some of them also didn’t really understand the implications of a Rights issue and didn’t wish to fork out more money to subscribe for their rights.

For those existing investors who could raise the capital to subscribe for their rights, they are returning most (if not all or more) of the dividends they had collected back to the REIT. Don’t let the discounted price fool you as you are essentially paying just to maintain your percentage shareholding in the REIT.
This is the reason is why I deem Singapore REITs to be a failure. Touted as a defensive investment with a steady income, it has failed to deliver its promise.

However, not all the REITS are failures as there are some exceptions. There are a few REITs that had kept their gearing relatively low throughout the years and did not have to raise any equity during the crisis. While investors in those REITS might have suffered a paper loss in capital value during the crisis, the prices have largely recovered by now.

Long term investors would have been well rewarded with all the dividends they had collected over the years if they did not panic and sell out at low valuations at the wrong time.

The reason why I’m writing this post now is that recently, some of the REITs have returned to the acquisition path again. As their stock prices have recovered from 2008, they can now make yield accretive acquisitions again.

Will history repeat itself?

As an investor, what I am looking for is not a REIT that keeps on growing its AUM. All I really need is one that can manage its existing assets well and not get into any (financial) trouble.

A very good site to track Singapore REITS is this website – SGX REIT Data. It is updated daily with the latest news and provides a comparison of the different REITS including their gearing, dividend yield, etc.

Bollinger Band

2011-04-17T20:25:00.000-07:00

Extracted from http://www.forex-central.net/bollinger-bands.php

Using the Bollinger bands

- Identifying a change in the trend
Price changes tend to occur after a tightening of the bands.

- Measuring the strength of a trend
The greater the spread between the lower and upper bands, the stronger the trend. Prices that go beyond the bands are a strong signal that the trend will continue.

- Playing on bounces between bands
The bands can be used as support and resistance levels. After having touched a band, prices have a tendency to want to touch the opposite band. This technique can be very useful in a market with no clear tendency or when the bands are parallel.

Even though Bollinger Bands can help generate buy and sell signals, they are not designed to determine the future direction of a security. The bands were designed to augment other analysis techniques and indicators. By themselves, Bollinger Bands serve two primary functions:

* To identify periods of high and low volatility.
* To identify periods when prices are at extreme, and possibly unsustainable, levels.

As stated above, securities can fluctuate between periods of high volatility and low volatility. Being able to identify a period of low volatility can serve as an alert to monitor the price action of a security. Other aspects of technical analysis, such as momentum, moving averages and retracements, can then be employed to help determine the direction of the potential breakout.

Remember that buy and sell signals are not given when prices reach the upper or lower bands. Such levels merely indicate that prices are high or low on a relative basis. A security can become overbought or oversold for an extended period of time. Knowing whether or not prices are high or low on a relative basis can enhance our interpretation of other indicators, and it can assist with timing issues in trading.

2011-04-03T08:38:00.000-07:00

PRIDE: Many of us believed that we had the right winning strategy after we had made a series of successful trades. Pride then began to creep in and often led us to become over-confident, complacent, inflexible, stubborn or resistant to changes. Pride comes before a fall and humility before wisdom. The fact is that, in a rising bull market, just about everyone can make profitable trades easily and to behave like an expert, as little knowledge, skills or experience is necessary to be successful at this time. Our greatest enemy in the stock market is truly OURSELVES. We have complete freedom to decide what and when to buy or sell. Yet when things go wrong, why do many decide to blame, the big boys, analysts, falling US market, our remisers or friends or anyone else (except ourselves)? If we repeatedly achieved the same poor end-results, it should become obvious that we need to examine our operating method and ourselves.
FAILURE TO FACE REALITY & TO DICOVER A SUITABLE WINNING STRATEGY: It is a well-known fact that the majority of gamblers, traders, punters and speculators lose money. For many, stock trading is most exciting or thrilling so long as the trade is in their favour but it can also be very stressful and agonizing when the trade is against them. However, the reality is that not everyone has the right temperament, knowledge and skills to be a successful trader. How many of us are able to cut loss easily on a bad trade? Sadly, many of us buy a stock as a “speculator” but ended up as an “unwilling investor or baby-sitter”. Most people also tend to release (sell) too early all the “eagles that could soar to the sky” and to keep with them what are mostly “lame and sick ducks”. Hence, it is common to meet “investors” holding a long list of stocks that are mostly in losing positions. The market also has a clever but harsh way of dealing with long-time holders of losing positions. Occasionally, one of the lame ducks would miraculously recover and start to run far enough as to enable the owner to sell it with full recovery of capital loss plus some profits. This duck then would immediately transform itself into an eagle and soar to the sky bringing much grief and heartache to its former owner. It is for each individual to know his own strength & weaknesses & work out a suitable winning strategy for himself taking into account his risk appetite, resources & knowledge.
MARKET BEHAVIOUR & TIMING: In a major market correction or sell-down, many stocks often gave up several months of their price gains in just a matter of several days. Hence, the profits accumulated over several months of numerous trades were liable to be wipe out in just a few trades that suffered heavy losses. For those who decided to cut loss and concede “defeat”, their positions were rather similar to that of generals, like Napoleon, who had fought and won almost all their battles (except the last few ones) but lose the war. An important factor to understand was that the stock market generally moved ahead of fundamentals by several months. A bull market usually started in the face of bad news and bad fundamentals and ended when the economy usually remained strong and corporate earnings still rising. This accounted for the existence of bull and bear traps that many fell into. A Conjuror (Magician) is able to fool his audience because he is always “one step ahead” of them. Likewise, the stock market, always being “one step ahead”, has no difficulty fooling the “herd” through false rallies, breakouts and breakdowns. Investors who understand such behaviour pattern and who could keep themselves one step ahead of the herd, would likely have won at least half of the battles and the war because they would be buying and selling before the herd did. For one to do this, one may need to have a complete change of mindset.
THE BIGGER FOOL THEORY: When euphoria surfaced in a bullish market, many would be lured into chasing speculative stocks because of the presence of bigger fools willing to buy them at increasingly higher price. Speculative plays often ended abruptly; and when that happened their stock prices could see sharp falls rapidly bringing hefty losses to those who got caught.
Caught In Vicious Cycle: An investor who bought a stock at the high end of the bull market would invariably be holding it (regardless of whether it was a "defensive stock', “blue chip”, “corn chip” or “potato chip”) with higher downside risk and lower upside capital gain. When a bear market arrived (always unexpectedly), it would just be a question of time before he would be holding and sitting on a losing position (always painful to cut loss & not many could take it). Unless he had averaged down his entry price, it would usually take a few years or the next bull market for him to recover from his losing position. By that time, the market would again be on the high end; and being so relieved and happy to be “set free from captivity”, he would most likely liquidate the stock with some profit but only to see it gone up much higher as was often the case. Being frustrated, he would likely buy into another stock, which would then also be at a high end; and hence, faced the high risk of being caught in another bear market downturn and becoming a “baby sitter” once again. This is one very bad move that all investors should strive to avoid.
1) when 1 of the 3 happens, cash out immediately. A) resignation of auditor, CFO or independent director. B) when borrowing increase significantly without utilization o internal resources first. C) when there is significant insider sell out, stake must be significant to avoid being overly cautious . 2) next, sell out sometimes after the 4th q results and wait for audit to be complete before re-entering. If price cheong during this window period, too bad.

Less investment opportunities in the property sector in 2011

2011-03-31T06:07:00.000-07:00

Extracted from http://news.fnchn.com/Funds_Less_investment_98374.aspx

2011-01-12 14:23:41 | View：8 | Tags：property sector

[Translate]

Since early this year, cyclical stocks such as property stocks have made quite strong performance. However, a great number of fund companies view that there are not many investment opportunities in the property sector in 2011.

As the property market is closely related to the people’s livelihood, it will be continuously suppressed by policies. Therefore, it would be hard to see a rally in property stocks. Some fund companies even asserted that the cycle for the financial and property sectors have terminated and the whole sector many only present partial trading opportunities.

For investment opportunities in other cyclical sectors, fund companies have different opinions. 　
Some optimistic fund companies hold that the performance growth in cyclical industries is worth expecting as the valuation level of cyclical sectors is close to the bottom and it is getting clearer that the Chinese economy will continue to go up in 2011.

Some fund companies maintaining cautious attitude point out that it would be hard for cyclical sectors to have trend opportunities. Policy control pressure will remain high in 2011 and this will directly suppress the performance of cyclical sectors such as banks and properties.

Predicting Future Stock Prices

2011-03-30T16:38:00.000-07:00

Extracted from http://www.buzzle.com/articles/how-to-predict-stock-market.html

Break Out Patterns
Intraday trading strategies can involve studying the various types of stock break out patterns. The breakouts can be either in the upward direction or the downward direction. The breakouts actually denote the movement of a stock out of a fixed range which has been prevalent for several trading sessions. So, a breakout can help us to determine whether to go long or short in any given situation.

Volume Changes
Volumes on a stock refer to the number of shares being traded on it. We can easily calculate the average of shares being traded with the help of the monthly and weekly volume data. If the volumes being traded on a stock increase more than the weekly or monthly averages, then it may denote rising investor interest and thereby, a chance of the stock going up. Observing volume changes is important for those looking at day trading for a living.

Look for Improvements in Company Performance
Keeping a tab on corporate performances is one of the ways of how to predict stock market. All days are not the same for business or corporate houses. If a firm delivers poor financial results for a few quarters, then this does not mean that it lacks the potential to become a market leader in the future. There may be some genuine reasons for which the firm could not deliver as per the expectations. If there are signs of recovery or rise in business, then betting on such stocks as potential future multibaggers would not be a bad idea. An extensive stock research will help you identify such stocks.

Analyze the Valuations
In the discussion on how to predict stock market, analyzing the valuations of counters has significant importance. The answer to the question how to predict future stock prices is by looking at how comfortable the valuations of a stock are. For judging the valuations, we take into account the price to book, cash flow, operating incomes, cash in hand, earnings per share and price to earnings ratio of the stock. The investments are made only if these financial data are found to be favorable and conducive. If the valuations are stretched or expensive, then a sharp fall in the stock price can be expected.

International Financial News
Business news has a considerable impact on stock prices and this has been proved on many occasions. As a smart stock investing professional, you should be able to decide whether ht effect of a particular news on a company would be positive or negative one. If you are successful in predicting stock market, then chances of getting a good appreciation in terms of value is possible.

Stock trading is a risky field and should be practiced by expert traders only. The above content on how to predict stock market prices will guide you in the right direction. Apart from the stock market, you can also consider other investment options such as real estate, gold and deposits, to safeguard your capital. So, hoping that you will utilize the above information fruitfully, I would like to sign off here. Good luck for the investments.

How will Japan quake affect Singapore stocks?

2011-03-14T08:21:00.000-07:00

Extracted from http://sg.finance.yahoo.com/news/How-Japan-quake-affect-yahoofinancesgwp-3124247818.html?x=0

Amongst the STI constituent stocks under our coverage, SIA's (BUY, TP:S$17.20) impact is probably larger than the rest. SIA has a high flight capacity exposure (Nagoya, Osaka, Fukuoka and Narita), which could face a risk of poor load factor. While management has yet to disclose the exact capacity exposed in its Japanese routes, we estimate that SIA risks recording low load factor for 15%-18% of its total capacity.
For Tiger Airways (BUY, TP:S$1.65), a budget airline, we do not expect any negative impact from the Japan quake as it currently does not operate any flights to Japan. In fact with the catastrophe in Japan, tourists will be deferring their holiday plans there hence there may likely be an increase in travel to other destinations which Tiger services.
The impact is minimal for most of the other sectors.

The Singapore banks are primarily exposed to the ASEAN and HK markets and have minimal exposure to Japan.
As for the oil & gas segment, Keppel Corp (BUY, TP:S$13.94) has a stake in a Japan unit involved in fabrication and supply of specialized steel parts, but this unit's earnings contribution share to Keppel is insignificant.
The REITS under our coverage have no significant assets in Japan, except for ParkwayLife REIT, which has some exposure in Japan (33% of portfolio value), but most of their properties are located in regions which are relatively less affected by the earthquake, and none are within the evacuation zones of the nuclear plants.
Small impact on commodity counters. Noble (BUY, TP:S$2.58) and Olam (BUY, TP:S$3.70) have little exposure to Japan. Straits Asia Resources (SAR) (NEUTRAL, TP:S$2.49) sells coal to Japan and coal power as an alternative to nuclear could lead to higher coal prices, a positive for SAR.
Negligible impact on telcos. Singtel (NEUTRAL, TP:S$3.00) has the largest proportion of mobile revenue coming from roaming at 20-25% but Japan is not a key contributor in terms of outbound roaming revenue.

Extracted from DBS Research 22 Feb 11

2011-02-22T07:25:00.000-08:00

Not necessary that yards will benefit from this. It is one thing if demand is driving oil price higher and another matter altogether if the rally is fuelled by supply disruption concerns. The former is growth driven; the latter is a result of uncertainty, as in the current case of unrest in the Middle East and North Africa.

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