Flying off for the weekend for a wedding in Malaysia. This will not be a long post because it is in the middle of the night and I really do not want to make a habit of writing late into the night because I am no Stephen King or John Grisham. Speaking of this weekend, I am really dragging my feet to go for this wedding as I have to host it too....Maybe when I finally make enough money to retire, I will host weddings professionally. At the rate I have been hosting weddings over the past few years, I am starting to feel like the flying dutchman.
Like I said, this week the market has not performed any better. It is still weak. We saw the first 2% fall in the Dow and the S&P500 in 8 months. Some bankers actually called me early in the morning to ask me what happened. It is panic stations with some investors. This is the part which I hate most about being in the investment business. People tend to get emotional when the market corrects. Human beings are really weakened by emotions. They do not think straight and some of the brightest minds in the world disintegrates in the face of a market correction. June is going to be pretty similar to May because everyone is getting ready to go for their summer holidays. So expect bigger moves and more panics.
Some of you who have been following my blog for some time will know that I have been predicting higher privatisation and M&A action this year. It seems like every week we have a nice little privatisation offer at a significant premium. This week we had Portek getting the offer to be taken private and it is really a waste because I was actually getting ready to invest in it. I know, you may think I am speaking for hindsight, but my broker (whom I know reads this blog) can be my witness that I have been wanting to buy this stock since more than 2 weeks ago. Another wasted opportunity...meaning a later retirement for me.
Another notable mention for the week is the movement of one of my all time favourites, Sarin Technologies. I have written about this stock twice and there are quite a few people who followed my call who were complaining that I have picked another dog...However, good things comes to those who wait. The stock has moved up more than 30% over this one and half weeks. Expect more to come because I believe this is a winner. Do take a look at my old posts to see how my analysis of the company is coming true now. You will have to go back around 9 months to see those posts. It is the only stock which I have ever written twice about. Shows you my conviction. This is no Sarin gas.
There are many more value picks in this blog which still have not moved and I know patience is waning on some of them. But when you are onto a good thing, do not give up. If the company is a good one, when the time comes, you will be handsomely rewarded. Investing is not about the short term, its all about the medium to long term. Give it some time, it will come. It is just like buying properties after the Asian crisis, how many years did it take for property prices to hit a new high? 10 years? 13 years? But when it did, pay day really came to those who had the discipline to wait. The same thing will happen with financials like Goldman, Citi, Wells Fargo etc. If you have money and have the patience to wait, it will do very well.
This week, something wierd also happened. Artivision (stock of the year) fell from its lofty highs of $0.29 cents to $0.11 cents in a matter of 4 days. The fall from grace was as swift as its rise to stardom. Funny thing is, when it was rising, SGX did not even bother to question this company on the trading activity. However, when it came down, the SGX came out with a set of questions on whether the company was had the resources to maintain its going concern status. Isn't that wierd? This company has not changed in terms of fundamentals at all. It is still losing money, burning its cash and not doing much. Why weren't the questions asked when the stock was rising 300-400%? Funny how regulators work. Always behind the curve. Intelligence is obviously lacking in the organisation.
Million Dollar Question: Do you think the US housing market is going to turn around soon? Or is it a double dip in the housing market?
The prices of single-family homes in 20 major cities fell for the eighth straight month and confirmed that there is a double-dip in the housing market, according to the S&P/Case-Shiller home price index released Tuesday by Standard & Poor's. Home prices fell a non-seasonally adjusted 0.8% in March. Prices have moved down 3.6% in the past year. Home prices declined in 18 of the 20 metropolitan areas tracked by Case-Shiller in March compared with February. Washington D.C. and Seattle were the only markets where home prices increased in March.
What does this mean? QE2 has failed. In my previous post, I have already said this. This double dip shows wealth destruction continues in the US. Consumer spending and confidence is not going to be strong as long as the largest asset on most family balance sheets continues to drop. It is pure logic. Bernanke seems to think that inflating the prices of other assets like stocks, bonds and commodities will make people feel richer, distracting them from the pain of losing their home equity. Plain stupidity. Now we are seeing the market falling even as the USD continues to be weak. What does that mean? They are expecting QE3. Treasury yields are falling again, what that means is that the market totally expects more support for treasury bills from the Fed. This is in the face of Moodys warning that they are downgrading the outlook for US debt. Do not even get me started on ratings agencies. Dumb as hell....
Ok this is turning out to be a criticism piece by me on SGX, the Fed and ratings agencies. It must be due to the immense pressure faced during work and the assignment of hosting a wedding which I wanted no part of.
Its getting late. Better go to bed.
Have a good weekend and week ahead!
Best,
SVI
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