Bank of Ireland had a great run, now for Citi to show more strength.

Tis the season to be jolly. I believe that may be the case going into December this year. I certainly hope I will be in a good healthy state going into this Christmas season to fully take part in the festivities. Fingers crossed, work will also slow down. It has really been a tough first week of the last month of the year and the light at the end of the tunnel in terms of work is totally non existent.

Last week, my schedule was so tight that I had no time to really put in a meaningful post. The market reactions to the various headlines was just frustrating to me because so many people were acting like idiots selling on the pointless news flow published by their equals. I keep telling investors to stop reading too much into the over sensationalised headlines but no one would listen. Just like what the great Warren Buffett always says, " the daily gyrations of the market is just noise." It does not take a genius to do well in the market, it takes someone who is calm and unemotional. Basically what that means is that a comatose person should do better than an emotional genius in investing. Ok I am being a little extreme but no one can really disagree with me on this point right?

The market started December with a bang, a strong rebound for most markets except China. Top analysts and strategists are still looking really silly by being so bullish on China over the past 12 months with it still logging in -12% returns this year on the Shanghai Composite.

Last week, I mentioned about the bank of Ireland being irrationally cheap and it has already risen 30% this week. For those brave souls out there, good for you. Investing takes a sound mind and a good gut to be successful. I would have liked to write about a particular stock today but my health is really failing me these days. The soul is willing but the flesh is weak.

Today lets talk about how well some of my picks have done this year. We had another buyout offer for one of my calls, Reyoung at $0.53. What price did I call it at? How about Bright World Precision hitting a 52 week high last week? They did not move overnight but they sure did well if you held it for 12 months. Another illustration on how bottom up stock picking actually delivers over the longer term. Be patient. I know of a close friend of mine who kept complaining that Reyoung had no movement and totally under performing the market. Well look who has outperformed the market over the past 12 months?

So is this current 1 week old rally for real? Is Santa Claus going to deliver a nice rally this December? I think we could end the year on a strong note. We have good ol' Benny Bernanke going on "60 minutes" talking about how the US recovery is going to take another 5 years to get back on track and how he feels inflation can be controlled when the time comes to control it. 100% sure about it? My goodness, talk about being confident. What does this all mean? He is just going to make it easier to borrow money than for you to bring yourself to deposit it. So its all green light for more asset inflation. What does he believe in? He believes in the wealth effect of asset inflation translating to higher consumer spending and leading to more jobs created. So which asset class has the broadest reach across the economy? Stocks of course. Wa la...we have the answer to bringing the US economy back from the dead? Push up stock prices so to make people feel richer and we will see economic activity come back to life. But is this really a long term fix or just a short term

It looks like Bush era tax cuts will be extended to over the next two years, this is another plus point for the economy and should provide another positive boost for the markets. I am impressed on how the Eurozone is looking for more austerity measures while the US is trying their best to get more spending. This gives economists a very good basis for comparison between the 2 developed super powers. Only time will tell which approach will work. My gut tells me, Trichet is still going to come out looking like a genius, but who am I to say?

For those people who like the Bank of Ireland pick, I am not calling for a strong buy on Citigroup because I feel $5 is not too far from now. Why? Cos the Fed has finished selling their last tranche at $4.35 and now there will be no worries over a possible share overhang. Citi is still trading below its book value and at a very reasonable price to earnings of 18 times. So I am calling for it as my key call and lets see how it works out.

I took 5 days to finish this post because time is really becoming a rare commodity for me. The current price of Bank of Ireland is 60% higher from time I called for it last weekend. This shows you how crazy markets can be. The overshooting theory will never go out of fashion with irrationality being a deep rooted flaw of humans.

Sorry for the lack of constructive things to say over the past two weeks, but balancing work, life and study is no easy feat. I have a couple of stock ideas to write about but I just do not have time to do so. Well tough....

Have a great remaining week ahead!

Best,

SVI