Stock Markets
I've been thinking about where I've been wrong this year. Well, I've been overly bullish right up to April / May. I knew that by the end of QE2 stocks will probably collapse like it did in 2010 May, a month after the QE 1 ended. I calculated that we could face a huge decline in July / Aug. I wanted to take profit in May. But in May, most stock indices in emerging markets were already down by between 5 - 10%! So the correction occured a month earlier than I had expected. Perhaps I overlooked an indicator that I should have, an important leading index. I don't know. But I'm extremely displeased with myself.
In my defence, I've looked at the Dow Jones Transportation Index, which peaked only on 14 July. Copper prices peaked in Feb 2011 but stayed relatively stable since.
I've also tried to call a few of my clients / friends in May to rebalance but they were often too busy to meet.
From Now till end 2011
I know. It's only 4 months left. But it could be your single most important four months in your life. Let's pretend the US and EU comprise around 55% of the world's GDP. If consumption and government spending falls 5% and government spending falls 10% due to austerity measures, OECD countries will fall by a whopping 3.7%.
Meanwhile developing countries, which comprise the rest, will still grow consumption at a breakneck speed of 10% per annum. Government spending will rise by 10% per annum. Sure, they could have raised more spending coz their officials could have plenty of personal benefits. However, net exports will fall to negative 10%.
The non-OECD region will grow at 3.3%. Growth in non-OECD countries will be insufficient to make up for the contraction in OECD and the world's economy will contract 0.36% in 2012.
What will the governments in the west do? They will print money but it will be ineffective. INstead, inflation will shoot up. Gold will shoot up and so will commodities. Stocks will trend down. Bonds will be destroyed except for Asian bonds.
Will write some more after my nap. Very shack. I've been suffering from insomnia for 1 year. I need my fix up from Melotonin.
Monday 29 August 2011
Sunday 28 August 2011
Very Muted Growth Coming for Next 10 Years: Faber
I believe Singapore's export dependent economy will plunge into quite a long recession, starting from 2nd half of 2011, well into 2012. While the risk of a recession in the US and EU is around 30 - 40%, Singapore is far more sensitive to western economies' growth.
Perhaps we should have switched to a more service oriented economy and do away with the manufacturing sector slowly. Since the 80s, Singapore has never been suitable for manufacturing because our labour cost is very high.
Moreover, most Singaporeans don't aspire to be factory workers, but in well-heeled jobs in the service sector.
Winter is heading our way.
Both the US and Europe are facing a decade of slow growth brought on primarily by the blunders of central banks, noted doomsayer Marc Faber said.
Investors should protect themselves by buying plenty of physical gold and putting it in a secure location, preferably outside the US, the author of the Gloom, Boom and Doom newsletter told CNBC.
"If I look at the politicians both in Europe and the US, I don't think that prospect (for growth) is very good," he said. "If I also look at the entitlement system and the government expenditures and the fiscal deficits and the debt overhang, I think for the next 10 years we'll have very muted growth in the Western world and standards of living for the average household will continue to decline."
In other words, he said, the next 10 years are likely to be much like the previous decade.
"I think we never really came out of the recession in many different sectors of the economy," Faber said. "If you look back to say 1999 to today, the US as an economy, macroeconomically speaking, is of course much worse off than in 1999—courtesy of the Federal Reserve I may add."
Many prominent economists have joined Faber's dour outlook for the US economy, at least in the short term.
Goldman Sachs has cut its forecast for growth to 1.5% for the year, and other parts of the world are experiencing slowdowns, as well.
In such a slow-growth environment, Faber prescribed a diversified mix for portfolios—25% to 30% in stocks, 20% to 30% in physical gold—"in a safe deposit box ideally outside the US in various locations" because "I don't trust anyone"—some cash, and up to 30% in real estate, particularly in Asia.
"I think it's important in today's very uncertain world to diversify not only in various asset classes...but also the custody of your assets should be in different jurisdictions," he said.
Amid the turmoil surrounding markets, including the Standard & Poor's downgrade of US debt, gridlock in Washington and burgeoning European debt problems, Faber predicted more investors would pull back positions in the capital markets.
"Investors, kind of worldwide, trusted the regulators, they trusted the system and they were enthusiastic about owning equities," he said. "Over the last 10 years, the mood has changed a lot. Investors and individual investors in particular, they don't trust management anymore. They are upset about executive compensation, they're upset about regulators. They think the markets are rigged and they're upset about the ratings agencies.
"A lot of individuals will not came back to the (stock) market and on rebound they will have reduced their positions."
Perhaps we should have switched to a more service oriented economy and do away with the manufacturing sector slowly. Since the 80s, Singapore has never been suitable for manufacturing because our labour cost is very high.
Moreover, most Singaporeans don't aspire to be factory workers, but in well-heeled jobs in the service sector.
Winter is heading our way.
'Very muted growth' coming for next 10 years: Faber
Published on Tue, Aug 23, 2011 at 22:04 | Source : 
Updated at Wed, Aug 24, 2011 at 10:31
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Investors should protect themselves by buying plenty of physical gold and putting it in a secure location, preferably outside the US, the author of the Gloom, Boom and Doom newsletter told CNBC.
"If I look at the politicians both in Europe and the US, I don't think that prospect (for growth) is very good," he said. "If I also look at the entitlement system and the government expenditures and the fiscal deficits and the debt overhang, I think for the next 10 years we'll have very muted growth in the Western world and standards of living for the average household will continue to decline."
In other words, he said, the next 10 years are likely to be much like the previous decade.
"I think we never really came out of the recession in many different sectors of the economy," Faber said. "If you look back to say 1999 to today, the US as an economy, macroeconomically speaking, is of course much worse off than in 1999—courtesy of the Federal Reserve I may add."
Many prominent economists have joined Faber's dour outlook for the US economy, at least in the short term.
Goldman Sachs has cut its forecast for growth to 1.5% for the year, and other parts of the world are experiencing slowdowns, as well.
In such a slow-growth environment, Faber prescribed a diversified mix for portfolios—25% to 30% in stocks, 20% to 30% in physical gold—"in a safe deposit box ideally outside the US in various locations" because "I don't trust anyone"—some cash, and up to 30% in real estate, particularly in Asia.
"I think it's important in today's very uncertain world to diversify not only in various asset classes...but also the custody of your assets should be in different jurisdictions," he said.
Amid the turmoil surrounding markets, including the Standard & Poor's downgrade of US debt, gridlock in Washington and burgeoning European debt problems, Faber predicted more investors would pull back positions in the capital markets.
"Investors, kind of worldwide, trusted the regulators, they trusted the system and they were enthusiastic about owning equities," he said. "Over the last 10 years, the mood has changed a lot. Investors and individual investors in particular, they don't trust management anymore. They are upset about executive compensation, they're upset about regulators. They think the markets are rigged and they're upset about the ratings agencies.
"A lot of individuals will not came back to the (stock) market and on rebound they will have reduced their positions."
Thursday 25 August 2011
Markets Could Rally For A While
According to Marc Faber, markets may rally a further 6 - 7% due to double bottom formation, insider buying etc.
I will be calling each of you individually to devise action plans around Sep / Oct 2011. Keep the faith.
8.24.2011
We Can Rally For A While
We had rally from the low on the ninth of August at 1,101 on the S&P to almost 1,200. Then we came right down again. Basically we did not make new lows. And now I think we can rally again for a while.
I think a lot of people will say the markets formed a double low and we have some technical indicators that are going to turn positive, so we could rally around 1,250, but as I said before, for me, we reached a high on May 2, 2011. 1,370 on the S&P–that we will not go through. My view is you have a lot of people with strategies that are very bullish. They have a yearend target of around 1,400-1,450 on the S&P. Then you have the super bear. I think both camps will be disappointed. - in Bloomberg.com
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.
I think a lot of people will say the markets formed a double low and we have some technical indicators that are going to turn positive, so we could rally around 1,250, but as I said before, for me, we reached a high on May 2, 2011. 1,370 on the S&P–that we will not go through. My view is you have a lot of people with strategies that are very bullish. They have a yearend target of around 1,400-1,450 on the S&P. Then you have the super bear. I think both camps will be disappointed. - in Bloomberg.com
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.
Wednesday 24 August 2011
A Rebound May Have Started
Gold briefly touched USD1900/oz yesterday but fell to USD1850/oz today. The chart shows that it's been rising exponentially and is unsustainable. I bought more from 1550 and didn't expect it will surge almost 20%! I started to invest in gold at around USD1000/oz. It has been a very profitable trade for me. I've started taking profit and almost liquidated half my positions. I believe gold will reach USD2200 - 2500 soon on central bank buying an more QE announcements.
Stocks seems to have embarked on another rally that may last from as little as one week to as long as a month. I doubt if it will break the May high. The STI, currently at 2750, will probably rebound to 3000 before falling off again. QE 3 will come very late, probably in 1Q 2012 and by then STI could have fallen to 2300. There's no growth, but stocks won't collapse because companies have a lot of cash to engage in share buybacks, pay more dividends and embark on M&As.
One interesting asset class other than gold that seems to have done well is Agriculture. It looks like embarking on a month to a year's worth of rally. Commodity futures look set to outperform in this inflationary period.
This is the same situation as in 1970 - 1975; stagflationary times. It's not so good for equities. It's very bad for bonds. It's very good for commodities, especially gold.
Stocks seems to have embarked on another rally that may last from as little as one week to as long as a month. I doubt if it will break the May high. The STI, currently at 2750, will probably rebound to 3000 before falling off again. QE 3 will come very late, probably in 1Q 2012 and by then STI could have fallen to 2300. There's no growth, but stocks won't collapse because companies have a lot of cash to engage in share buybacks, pay more dividends and embark on M&As.
One interesting asset class other than gold that seems to have done well is Agriculture. It looks like embarking on a month to a year's worth of rally. Commodity futures look set to outperform in this inflationary period.
This is the same situation as in 1970 - 1975; stagflationary times. It's not so good for equities. It's very bad for bonds. It's very good for commodities, especially gold.
Monday 22 August 2011
What a Week!
It's been a terrible week. Tonnes of portfolios to rebalance. I basically could not have predicted this crash, although there was a warning sign that I ignored out of a forest of indicators. If out of 10 indicators, only 1 pointed to danger, am I supposed to run?
Things at work hasn't been easy too. My team is headed for a direction that I feel uncomfortable with. The corridors of power threaten to take away a certain amount of autonomy and intellectual rights. I cannot be expected to follow strictly to a set of portfolios because every situation is dynamic. There should be room for advisers to adjust otherwise why hire CFAs and CAIAs to advise? All you need a junior advisers to identify the risk profile of client and choose the correct cookie cutter portfolio.
Perhaps it is time for me to look around. The longer I stay, the tighter regulations become. I've been trying very hard to change the way the organisation does things. To align the interests of the clients and advisers. But most financial institutions, like in Wall Street, are after short term profits.
Finally, I've taken a big step to recommend CTAs for around 30 - 40% of the portfolio. I am advocating around 10% into Amundi Volatility World, 30% into Man AHL Trend or Winton, 40% into Templeton Global Bond Fund SGD Hedged and only 20% into Emerging market equities.
The dead cat bounce that occured in the last 2 weeks as expected fizzled out and I am starting to short again. Credit spreads have continued to rise. VIX hovered between 35 - 45. TED Spreads hit a new high of 30 bps, unseen since 2008. The 3 month USD LIBOR OIS spread has also hovered around 20 - 25 bps.
I am expecting another 10% - 15% downside before we see a meaningful bounce. QE3 is unlikely to happen until next year because core CPI in the US has hit 1.8%. Austerity measures will drag global economy down. Export dependent economies in Asia will suffer contractions in exports.
On the other hand, what's positive is insiders buying and companies engaging in share buybacks unseen since early 2009. This is another indicator that stocks offer good value. M&As are likely to increase as companies seek earnings growth through acquisitions in the absence of organice growth.
The signal is still very mixed but I am starting to get bearish. On a scale of 1 for bearish and 10 for maximum bullish, I am around 3/10. There's a saying that goes, "once something is wrong, always be the first to get out". I believe strongly in that.
Things at work hasn't been easy too. My team is headed for a direction that I feel uncomfortable with. The corridors of power threaten to take away a certain amount of autonomy and intellectual rights. I cannot be expected to follow strictly to a set of portfolios because every situation is dynamic. There should be room for advisers to adjust otherwise why hire CFAs and CAIAs to advise? All you need a junior advisers to identify the risk profile of client and choose the correct cookie cutter portfolio.
Perhaps it is time for me to look around. The longer I stay, the tighter regulations become. I've been trying very hard to change the way the organisation does things. To align the interests of the clients and advisers. But most financial institutions, like in Wall Street, are after short term profits.
Finally, I've taken a big step to recommend CTAs for around 30 - 40% of the portfolio. I am advocating around 10% into Amundi Volatility World, 30% into Man AHL Trend or Winton, 40% into Templeton Global Bond Fund SGD Hedged and only 20% into Emerging market equities.
The dead cat bounce that occured in the last 2 weeks as expected fizzled out and I am starting to short again. Credit spreads have continued to rise. VIX hovered between 35 - 45. TED Spreads hit a new high of 30 bps, unseen since 2008. The 3 month USD LIBOR OIS spread has also hovered around 20 - 25 bps.
I am expecting another 10% - 15% downside before we see a meaningful bounce. QE3 is unlikely to happen until next year because core CPI in the US has hit 1.8%. Austerity measures will drag global economy down. Export dependent economies in Asia will suffer contractions in exports.
On the other hand, what's positive is insiders buying and companies engaging in share buybacks unseen since early 2009. This is another indicator that stocks offer good value. M&As are likely to increase as companies seek earnings growth through acquisitions in the absence of organice growth.
The signal is still very mixed but I am starting to get bearish. On a scale of 1 for bearish and 10 for maximum bullish, I am around 3/10. There's a saying that goes, "once something is wrong, always be the first to get out". I believe strongly in that.
Monday 15 August 2011
We Have Probably Entered a Bear Market
Most stock markets have exhibited signs of entering a bear market, like in 2008 Jan. Most long term supports have been smashed at high volumes. The rebound appears to be short coverings and may not clear April's highs. Valuations according to PE ratios are at 14x, but according to PE10, taking the cyclically adjusted PE ratio over 10 years of earnings, S&P500 earnings are at the highest quintile. The prognosis is not good.
IMF chief has warned of western governments running out of policy options. Monetary policies are already as loose as can be. Fiscal policies have been curtailed by austerity measures. For the emerging economies, governments are walking a tight rope between inflation and stimulation. If they attempt to boost their flagging export dependent economies, inflation will flare and there will be unrest on the streets.
Here is a new update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly averages of daily closes for July 2011, which is 1325.18. The ratios in parentheses use the monthly close of 1292.28 (which this month gives the same ratios to the first decimal). For the latest earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.
● TTM P/E ratio = 15.6 (15.6)
● P/E10 ratio = 22.7 (22.7)
The Valuation Thesis
A standard way to investigate market valuation is to study the historic Price-to-Earnings (P/E) ratio using reported earnings for the trailing twelve months (TTM). Proponents of this approach ignore forward estimates because they are often based on wishful thinking, erroneous assumptions, and analyst bias.
TTM P/E Ratio
The "price" part of the P/E calculation is available in real time on TV and the Internet. The "earnings" part, however, is more difficult to find. The authoritative source is the Standard & Poor's website, where the latest numbers are posted on the earnings page. (See the footnote below for instructions on accessing the file).
The table here shows the TTM earnings based on "as reported" earnings and a combination of "as reported" earnings and Standard & Poor's estimates for "as reported" earnings for the next few quarters. The values for the months between are linear interpolations from the quarterly numbers.
The average P/E ratio since the 1870's has been about 15. But the disconnect between price and TTM earnings during much of 2009 was so extreme that the P/E ratio was in triple digits — as high as the 120s — in the Spring of 2009. In 1999, a few months before the top of the Tech Bubble, the conventional P/E ratio hit 34. It peaked close to 47 two years after the market topped out.
As these examples illustrate, in times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. "Why the lag?" you may wonder. "How can the P/E be at a record high after the price has fallen so far?" The explanation is simple. Earnings fell faster than price. In fact, the negative earnings of 2008 Q4 (-$23.25) is something that has never happened before in the history of the S&P 500.
Let's look at a chart to illustrate the unsuitability of the TTM P/E as a consistent indicator of market valuation.
The P/E10 Ratio
Legendary economist and value investor Benjamin Graham noticed the same bizarre P/E behavior during the Roaring Twenties and subsequent market crash. Graham collaborated with David Dodd to devise a more accurate way to calculate the market's value, which they discussed in their 1934 classic book, Security Analysis. They attributed the illogical P/E ratios to temporary and sometimes extreme fluctuations in the business cycle. Their solution was to divide the price by a multi-year average of earnings and suggested 5, 7 or 10-years. In recent years, Yale professor Robert Shiller, the author of Irrational Exuberance, has reintroduced the concept to a wider audience of investors and has selected 10 years as the earnings denominator. As the accompanying chart illustrates, this ratio closely tracks the real (inflation-adjusted) price of the S&P Composite. The historic average is 16.4. Shiller refers to this ratio as the Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE, or the more precise P/E10, which is my preferred abbreviation.
The Current P/E10
After dropping to 13.3 in March 2009, the P/E10 has rebounded to the vacinity of 22. The chart below gives us a historical context for these numbers. The ratio in this chart is doubly smoothed (10-year average of earnings and monthly averages of daily closing prices). Thus the fluctuations during the month aren't especially relevant (e.g., the difference between the monthly average and monthly close P/E10).
Of course, the historic P/E10 has never flat-lined on the average. On the contrary, over the long haul it swings dramatically between the over- and under-valued ranges. If we look at the major peaks and troughs in the P/E10, we see that the high during the Tech Bubble was the all-time high of 44 in December 1999. The 1929 high of 32 comes in at a distant second. The secular bottoms in 1921, 1932, 1942 and 1982 saw P/E10 ratios in the single digits.
Where does the current valuation put us?
For a more precise view of how today's P/E10 relates to the past, our chart includes horizontal bands to divide the monthly valuations into quintiles — five groups, each with 20% of the total. Ratios in the top 20% suggest a highly overvalued market, the bottom 20% a highly undervalued market. What can we learn from this analysis? The Financial Crisis of 2008 triggered an accelerated decline toward value territory, with the ratio dropping to the upper second quintile in March 2009. The price rebound since the 2009 low pushed the ratio back into the top quintile. By this historic measure, the market is expensive, with the ratio approximately 38% above its average (arithmetic mean) of 16.4.
We can also use a percentile analysis to put today's market valuation in the historical context. As the chart below illustrates, latest P/E10 ratio is approximately at the 87th percentile. If we leave out the Tech Bubble, the current P/E10 would be at 87.5%.
A more cautionary observation is that every time the P/E10 has fallen from the top to the second quintile, it has ultimately declined to the first quintile and bottomed in single digits. Based on the latest 10-year earnings average, to reach a P/E10 in the high single digits would require an S&P 500 price decline below 540. Of course, a happier alternative would be for corporate earnings to make a strong and prolonged surge. When might we see the P/E10 bottom? These secular declines have ranged in length from over 19 years to as few as three. The current decline is now in its eleventh year.
Note: Follow these steps to access the Standard & Poor's earnings spreadsheet:
Note: For readers unfamiliar with the S&P Composite index, see this article for some background information.
IMF chief has warned of western governments running out of policy options. Monetary policies are already as loose as can be. Fiscal policies have been curtailed by austerity measures. For the emerging economies, governments are walking a tight rope between inflation and stimulation. If they attempt to boost their flagging export dependent economies, inflation will flare and there will be unrest on the streets.
Is the Stock Market Cheap?
By Doug Short
August 1, 2011
August 1, 2011
● TTM P/E ratio = 15.6 (15.6)
● P/E10 ratio = 22.7 (22.7)
The Valuation Thesis
A standard way to investigate market valuation is to study the historic Price-to-Earnings (P/E) ratio using reported earnings for the trailing twelve months (TTM). Proponents of this approach ignore forward estimates because they are often based on wishful thinking, erroneous assumptions, and analyst bias. TTM P/E Ratio
The "price" part of the P/E calculation is available in real time on TV and the Internet. The "earnings" part, however, is more difficult to find. The authoritative source is the Standard & Poor's website, where the latest numbers are posted on the earnings page. (See the footnote below for instructions on accessing the file).
The table here shows the TTM earnings based on "as reported" earnings and a combination of "as reported" earnings and Standard & Poor's estimates for "as reported" earnings for the next few quarters. The values for the months between are linear interpolations from the quarterly numbers.
The average P/E ratio since the 1870's has been about 15. But the disconnect between price and TTM earnings during much of 2009 was so extreme that the P/E ratio was in triple digits — as high as the 120s — in the Spring of 2009. In 1999, a few months before the top of the Tech Bubble, the conventional P/E ratio hit 34. It peaked close to 47 two years after the market topped out.
As these examples illustrate, in times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. "Why the lag?" you may wonder. "How can the P/E be at a record high after the price has fallen so far?" The explanation is simple. Earnings fell faster than price. In fact, the negative earnings of 2008 Q4 (-$23.25) is something that has never happened before in the history of the S&P 500.
Let's look at a chart to illustrate the unsuitability of the TTM P/E as a consistent indicator of market valuation.
Legendary economist and value investor Benjamin Graham noticed the same bizarre P/E behavior during the Roaring Twenties and subsequent market crash. Graham collaborated with David Dodd to devise a more accurate way to calculate the market's value, which they discussed in their 1934 classic book, Security Analysis. They attributed the illogical P/E ratios to temporary and sometimes extreme fluctuations in the business cycle. Their solution was to divide the price by a multi-year average of earnings and suggested 5, 7 or 10-years. In recent years, Yale professor Robert Shiller, the author of Irrational Exuberance, has reintroduced the concept to a wider audience of investors and has selected 10 years as the earnings denominator. As the accompanying chart illustrates, this ratio closely tracks the real (inflation-adjusted) price of the S&P Composite. The historic average is 16.4. Shiller refers to this ratio as the Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE, or the more precise P/E10, which is my preferred abbreviation.
The Current P/E10
After dropping to 13.3 in March 2009, the P/E10 has rebounded to the vacinity of 22. The chart below gives us a historical context for these numbers. The ratio in this chart is doubly smoothed (10-year average of earnings and monthly averages of daily closing prices). Thus the fluctuations during the month aren't especially relevant (e.g., the difference between the monthly average and monthly close P/E10).
Where does the current valuation put us?
For a more precise view of how today's P/E10 relates to the past, our chart includes horizontal bands to divide the monthly valuations into quintiles — five groups, each with 20% of the total. Ratios in the top 20% suggest a highly overvalued market, the bottom 20% a highly undervalued market. What can we learn from this analysis? The Financial Crisis of 2008 triggered an accelerated decline toward value territory, with the ratio dropping to the upper second quintile in March 2009. The price rebound since the 2009 low pushed the ratio back into the top quintile. By this historic measure, the market is expensive, with the ratio approximately 38% above its average (arithmetic mean) of 16.4.
We can also use a percentile analysis to put today's market valuation in the historical context. As the chart below illustrates, latest P/E10 ratio is approximately at the 87th percentile. If we leave out the Tech Bubble, the current P/E10 would be at 87.5%.
Or was March 2009 the beginning of a secular bull market? Perhaps, but the history of market valuations suggests a cautious perspective.
Note: Follow these steps to access the Standard & Poor's earnings spreadsheet:
- Click the S&P 500 link in the second column of the Standard & Poor's home page.
- Click the plus symbol to the left of the "Download Index Data" title.
- Click the Index Earnings link to download the Excel file. Once you've downloaded the spreadsheet, see the data in column D.
Note: For readers unfamiliar with the S&P Composite index, see this article for some background information.
Saturday 13 August 2011
Insiders Buying Stock at Highest Rate Since March 09 as S&P 500 Drops
Can insiders be trusted? Will they be right this time?
More executives at Standard & Poor’s 500 Index companies are buying their stock than any time since the depths of the credit crisis after valuations plunged 25 percent below their five-decade average.
Sixty-six insiders at 50 companies bought shares between Aug. 3 and Aug. 9, the most since the five days ended March 9, 2009, when the benchmark index for U.S. equities reached a 12-year low, according to data compiled by Bloomberg. Morgan Stanley (MS) Chief Executive Officer James Gorman and two other managers purchased 175,000 shares of the New York-based bank as the shares fell to the lowest level since March 2009, according to filings with the U.S. Securities and Exchange Commission.
Almost $3 trillion has been erased from U.S. equity values in the last three weeks as signs the economy is slowing and S&P’s downgrade of the government’s AAA credit rating left the benchmark gauge for U.S. shares within 30 points of a bear market. Some analysts say insider buying is bullish because executives have the best information about their prospects.
“Nobody knows a company better than the people running it,” Shawn Price, who manages $2.4 billion at Navellier & Associates Inc. in Reno, Nevada, said in a telephone interview.“It’s a positive sign that they are committing their personal capital.”
Gorman’s purchase of 100,000 shares was his first since joining Morgan Stanley in 2006 and the biggest stock acquisition among the firm’s executives in more than four years, according to Princeton, New Jersey-based InsiderScore.com, which analyzes insider transactions. Chief Financial Officer Ruth Porat and Paul J. Taubman, co-head of the firm’s investment bank, also bought stock.
Morgan Stanley fell 19 percent from July 21 through Aug. 4, the day of Gorman’s purchase. It has lost 17 percent since, falling to $16.45 yesterday, the lowest level since January 2009, data compiled by Bloomberg show.
General Motors Co. (GM) CEO Dan Akerson purchased $250,500 in shares of the automaker on Aug. 9, a day before the stock fell 6.3 percent to $23.92, the lowest level since its November initial public offering and down 35 percent for 2011. Akerson bought 10,000 shares for $25.05 each, bringing his total to 103,600, Detroit-based GM said in a regulatory filing.
Robert Hugin, the chairman and CEO of Summit, New Jersey-based Celgene Corp. (CELG), bought shares of the maker of blood-cancer drugs for the first time since at least 2003, according to data compiled by InsiderScore. Hugin acquired 10,000 shares on Aug. 8, when the stock fell to a five-month low, while Chief Financial Officer Jackie Fouse bought shares three times this month, according to SEC filings. The stock climbed 4.2 percent on Aug. 9 and closed at $51.85 yesterday, down 12 percent for the year, data compiled by Bloomberg show.
Executives at 14 S&P 500 companies sold shares between Aug. 3 and Aug. 9, according to Bloomberg data, bringing the ratio of those with buyers and those with sellers to 7 to 2. Since the beginning of 2004, there have been on average 3.08 companies in the S&P 500 with sellers for every company with buyers, according to InsiderScore.
“It’s a fire sale and the insiders are stepping up to buy at these prices,” Daniel Genter, who oversees about $3.7 billion as president of Los Angeles-based RNC Genter Capital Management, said in a telephone interview. “The insiders are saying that the lower valuation is unreasonable because they believe the earnings power of their companies is likely to go up.”
Insider behavior doesn’t always foreshadow stock moves, according to Michael Yoshikami, chief investment strategist at YCMNet Advisors. Selling by S&P 500 executives reached a record in November as the index was in the midst of a 33 percent rally from July 2 to April 29, 2011. They increased sales in August 2009 when the S&P 500 was halfway through an advance in which it doubled, data compiled by Bloomberg and InsiderScore show.
“It’s not a perfect indicator,” Yoshikami, who manages about $1 billion in Walnut Creek, California, said in a telephone interview. “Insiders can be wrong and get carried away by emotion. Just think about all the technology executives who didn’t sell at the highs because they were overly optimistic.”
The end of earnings season leads to an increase in insider transactions because executives are prevented from buying or selling before announcements, according to Ben Silverman, the Seattle-based research director at InsiderScore. Of the companies in the S&P 500, 427 have reported results since July 11, according to data compiled by Bloomberg.
U.S. laws require executives and directors to disclose stock purchases or sales within two business days. The data don’t include transactions related to options and so-called 10b5-1 programs, which allow executives to cash out a portion of their holdings when stocks reach predetermined prices.
Insiders Buying Stock at Highest Rate Since March ’09 as S&P 500 Drops
By Nikolaj Gammeltoft and Lu Wang - Aug 11, 2011 12:00 PM GMT+0800
The S&P 500 pit on the floor of the CME Group's Chicago Board of Trade. Photographer: Tim Boyle/Bloomberg
Aug. 11 (Bloomberg) -- More executives at Standard & Poor’s 500 Index companies are buying their stock than any time since the depths of the credit crisis after valuations plunged 25 percent below their five-decade average. Sixty-six insiders at 50 companies bought shares between Aug. 3 and Aug. 9, the most since the five days ended March 9, 2009, according to data compiled by Bloomberg. Dominic Chu reports on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Morgan Stanley chief executive officer James Gorman and two other managers purchased 175,000 shares of the New York-based bank. Photographer: Jin Lee/Bloomberg
Sixty-six insiders at 50 companies bought shares between Aug. 3 and Aug. 9, the most since the five days ended March 9, 2009, when the benchmark index for U.S. equities reached a 12-year low, according to data compiled by Bloomberg. Morgan Stanley (MS) Chief Executive Officer James Gorman and two other managers purchased 175,000 shares of the New York-based bank as the shares fell to the lowest level since March 2009, according to filings with the U.S. Securities and Exchange Commission.
Almost $3 trillion has been erased from U.S. equity values in the last three weeks as signs the economy is slowing and S&P’s downgrade of the government’s AAA credit rating left the benchmark gauge for U.S. shares within 30 points of a bear market. Some analysts say insider buying is bullish because executives have the best information about their prospects.
“Nobody knows a company better than the people running it,” Shawn Price, who manages $2.4 billion at Navellier & Associates Inc. in Reno, Nevada, said in a telephone interview.“It’s a positive sign that they are committing their personal capital.”
Stocks Drop
CEOs, directors and senior officers bought stock as the S&P 500 fell 18 percent from this year’s high on April 29 on concern about Europe’s debt crisis and the political battle over the U.S. debt ceiling. The index is trading at 12.3 times earnings in the past year, compared with its average since 1954 of 16.4, data compiled by Bloomberg show.Gorman’s purchase of 100,000 shares was his first since joining Morgan Stanley in 2006 and the biggest stock acquisition among the firm’s executives in more than four years, according to Princeton, New Jersey-based InsiderScore.com, which analyzes insider transactions. Chief Financial Officer Ruth Porat and Paul J. Taubman, co-head of the firm’s investment bank, also bought stock.
Morgan Stanley fell 19 percent from July 21 through Aug. 4, the day of Gorman’s purchase. It has lost 17 percent since, falling to $16.45 yesterday, the lowest level since January 2009, data compiled by Bloomberg show.
General Motors Co. (GM) CEO Dan Akerson purchased $250,500 in shares of the automaker on Aug. 9, a day before the stock fell 6.3 percent to $23.92, the lowest level since its November initial public offering and down 35 percent for 2011. Akerson bought 10,000 shares for $25.05 each, bringing his total to 103,600, Detroit-based GM said in a regulatory filing.
MEMC Electronic
CEO Ahmad Chatila and five other officers at MEMC Electronic Materials Inc. (WFR), which has a price-earnings ratio of 8.4, bought a combined 468,057 shares of the silicon-wafer maker on Aug. 5, when the stock sank to the lowest level since October 2002, regulatory filings showed. Shares of the St. Peters, Missouri-based company rallied 19 percent to $5.93 on Aug. 9, when the transactions were disclosed.Robert Hugin, the chairman and CEO of Summit, New Jersey-based Celgene Corp. (CELG), bought shares of the maker of blood-cancer drugs for the first time since at least 2003, according to data compiled by InsiderScore. Hugin acquired 10,000 shares on Aug. 8, when the stock fell to a five-month low, while Chief Financial Officer Jackie Fouse bought shares three times this month, according to SEC filings. The stock climbed 4.2 percent on Aug. 9 and closed at $51.85 yesterday, down 12 percent for the year, data compiled by Bloomberg show.
Insiders Buying
A total of 919 insiders bought stock among all publicly listed U.S. companies between Aug. 1 and yesterday, data compiled by InsiderScore show. That compares with a monthly average of 1,065 transactions in data going back to January 2004. About 1,390 insiders bought during the first 10 days of March 2009, InsiderScore data show.Executives at 14 S&P 500 companies sold shares between Aug. 3 and Aug. 9, according to Bloomberg data, bringing the ratio of those with buyers and those with sellers to 7 to 2. Since the beginning of 2004, there have been on average 3.08 companies in the S&P 500 with sellers for every company with buyers, according to InsiderScore.
“It’s a fire sale and the insiders are stepping up to buy at these prices,” Daniel Genter, who oversees about $3.7 billion as president of Los Angeles-based RNC Genter Capital Management, said in a telephone interview. “The insiders are saying that the lower valuation is unreasonable because they believe the earnings power of their companies is likely to go up.”
Rising Profits
Earnings per share increased 17 percent among the S&P 500 companies that have released quarterly results since July 11, according to data compiled by Bloomberg. About three-quarters of the companies have topped the average analyst profit forecast, the data show. Sales rose 13 percent during that period.Insider behavior doesn’t always foreshadow stock moves, according to Michael Yoshikami, chief investment strategist at YCMNet Advisors. Selling by S&P 500 executives reached a record in November as the index was in the midst of a 33 percent rally from July 2 to April 29, 2011. They increased sales in August 2009 when the S&P 500 was halfway through an advance in which it doubled, data compiled by Bloomberg and InsiderScore show.
“It’s not a perfect indicator,” Yoshikami, who manages about $1 billion in Walnut Creek, California, said in a telephone interview. “Insiders can be wrong and get carried away by emotion. Just think about all the technology executives who didn’t sell at the highs because they were overly optimistic.”
The end of earnings season leads to an increase in insider transactions because executives are prevented from buying or selling before announcements, according to Ben Silverman, the Seattle-based research director at InsiderScore. Of the companies in the S&P 500, 427 have reported results since July 11, according to data compiled by Bloomberg.
U.S. laws require executives and directors to disclose stock purchases or sales within two business days. The data don’t include transactions related to options and so-called 10b5-1 programs, which allow executives to cash out a portion of their holdings when stocks reach predetermined prices.
Big Emerging Stock Outflows May Signal Buy
Here's another angle looking at the stock markets. The historical PE of Emerging Markets is 12x and analysts forecast the forward PE to be 8.9x. That's a very optimistic 20.64% growth in EPS.
If we adjust down to a more manageable 15% growth forecast, 1 year forward PE ratio is likely to hit 10.4x. This is below mid cycle level of 14x over 20 years, but above the 2008 low of 7x. The recent 21% sell down of the MSCI Emerging Markets pushes valuations down from above mid cycle to below the average.But technicals is a horrible picture. All long term support lines have been smashed at high volumes. It seems that algo traders and trend followers have beaten fundamental investors for the past 2 months.
I tend to lean towards the technical side because all perception of stock valuation is reflected in the price action of the stocks. I'm 60% convinced that the bull is over... This rebound will not surpass 10% of the current sell down.
Big Emerging Stock Outflows May Signal Buy
By Michael Patterson and Jason Webb - Aug 12, 2011 11:08 PM GMT+0800
Investors pulled $7.7 billion in the week to Aug. 10, the third-largest withdrawal on record and about 1.1 percent of assets under management, according to research firm EPFR Global. The MSCI Emerging Markets Index jumped an average 17 percent in the six months after outflows of this magnitude during the past decade, posting gains on 11 of 12 occasions, data compiled by EPFR Global and Bloomberg show.
The MSCI gauge sank as much as 20 percent from its May 2 high this week on concern the U.S. economy is stalling andEurope’s debt crisis is worsening. The slump sent valuations 30 percent below the 20 year average at 8.9 times analysts’ 12-month profit estimates, data compiled by Bloomberg and Morgan Stanley show. Fund outflows are a contrarian signal for rallies because they show pessimistic investors have already sold, according to Commerzbank AG’s Michael Ganske.
“When things are selling off and investors are very bearish and panicking then it’s clearly a good time to add positions,” Ganske, head of emerging-markets research at Commerzbank in London, said in a phone interview. “There is clearly a compelling argument to reassess exposure in emerging equities as valuations are very, very cheap.”
The strategy of buying emerging-market stocks after weeks when outflows exceeded 1 percent of assets under management produced average gains of 2.2 percent in one month, 8.5 percent in three months and 28 percent in 12 months, according to data compiled by EPFR Global and Bloomberg.
History Shows Gains
Investors have also been rewarded for buying when the MSCI emerging index fell below 9 times earnings. The last dip to those levels in October 2008 was followed by a 60 percent rally during the next 12 months, data compiled by Bloomberg show. The gauge climbed 44 percent in the year after valuations tumbled that low in August 1998, the month Russia defaulted on $40 billion of debt, the data show.The MSCI index was little changed today after two days of gains. Reports today showed French economic growth stalled last quarter and euro-region industrial production unexpectedly fell in June.
The 21-country gauge has retreated about 5 percent this week after an unprecedented downgrade of America’s top credit rating by Standard & Poor’s and signs that Italy and Spain may struggle to refinance debt. The MSCI Emerging Markets Energy Index sank 7 percent, the most among 10 industry gauges, as oil prices tumbled.
‘Growth Scare’
A further retreat in commodities may spur more outflows from developing-nation equity funds, according to John-Paul Smith, emerging-market strategist at Deutsche Bank AG in London.“Over the short term it’s most likely a by-product of the global turmoil rather than a change of view on the relative attractions of emerging-market equities,” Smith said. “The real damage is likely to happen further out if, as we expect, investors become more negative about the fundamental prospects of both emerging markets and commodities.”
The MSCI index fell more than 15 percent in a month after fund outflows reached more than one percent of assets in August 2001, while the gauge retreated 6.5 percent when withdrawals exceeded that level in May 2006, data compiled by EPFR and Bloomberg show.
This week’s retreat in emerging-market share prices has produced buying opportunities and slowing growth in the developed world may ease inflation pressures in developing nations, said Ivo Kovachev, an emerging-markets money manager at London-based JO Hambro Capital Management Ltd.
The People’s Bank of China will leave borrowing costs unchanged for the rest of this year, according to eight of 10 analysts surveyed by Bloomberg this week. The Bank of Korea keptinterest rates unchanged for a second month on Aug. 11, whileIndonesia stayed on hold Aug. 9.
“There has been a growth scare in the world,” said Kovachev. “But perhaps a bit perversely, it may help emerging markets because this year they were suffering from overheating and inflation risk.”
Tuesday 9 August 2011
Last Days of a Bull... Return of the Bear
I have to admit it. I believed that the stock markets will run until mid 2012 and that we will have a recession in 2013, a long deep one. My basis of recommendation was that the US Treasury Yield Curve was still very steep. Stock valuations in terms of PE, PTB and EV/EBITDA was mid cycle.
Technicals looked very bad however. The austerity measures in EU and the US will drag the world's economy lower, together with Emerging Economies. The downgrading of US debt has forced investors to flee to safer haven; primarily in gold and EM debt.
I have downgraded my asset allocation to only 30% equities, 20% gold, 25% bonds, 25% CTAs...
We are either in the last stages of the bull or a bear market has already started. Charts of most major stock indices and commodities have been showing lower highs and lower lows. The VIX hit 43 this morning. We have witnessed the Dow falling by 550 points or 5.5% at some stage.
History never repeats, it rhymes.
Technicals looked very bad however. The austerity measures in EU and the US will drag the world's economy lower, together with Emerging Economies. The downgrading of US debt has forced investors to flee to safer haven; primarily in gold and EM debt.
I have downgraded my asset allocation to only 30% equities, 20% gold, 25% bonds, 25% CTAs...
We are either in the last stages of the bull or a bear market has already started. Charts of most major stock indices and commodities have been showing lower highs and lower lows. The VIX hit 43 this morning. We have witnessed the Dow falling by 550 points or 5.5% at some stage.
History never repeats, it rhymes.
Saturday 6 August 2011
Welcome to the Dangerous Decade
Many have asked me if the Bull Run will last another 6 months, or 1 year, or even till the end of 2012. A bear market is defined by the stock market falling by more than 20% according to convention. But to me, only a 30% fall or more qualifies as a bear. In Asia, every bear market since 1997 resulted in a 50% crash; 1997 Asian Financial Crisis, 2000 Tech bubble, 2008 Financial crisis. The next bear market should be no different.
What is the reason for my pessimism that we are at the 80th minute of a soccer game with probably no extra time left? Here’s why:
1. The US Has To Pay It’s Credit Card Bill for the Next 10 Years
From 1990 – 2007, consumer spending has been fuelled by debt. Savings rate of the Americans fell from 15% in around the late 80s to around 2.5% in 2007. American households have been re-mortgaging their homes to get credit. It was greatly helped by a real estate bubble spanning 2 decades that finally burst in 2008. With the property likely in the doldrums for the next 1 – 2 years, and US banks unlikely to be so generous in their lending again (mind you, you could buy a property with 5% down payment in the good ol’ days. If your credit rating is spotless, you can buy even with no down payments). This means that the US consumer is unlikely to spend as much as they did for the next 3 – 5 years, until savings rate reach around 15% again. How are the Asian economies with their export driven model able to grow at double digits if their biggest customer is on a cost cutting mode?
2. Baby Boomers in the US and EU Have Finally Hit Retirement Age
2010 – 2020 is the decade where most baby boomers hit retirement age. Pension funds will have to liquidate billions, if not trillions worth of shares and bonds to fund the retirement. It will create unprecedented pressure on risk assets this decade.
3. Austerity Measures Will Cause Eurozone to Plunge into Deep Recession
The socialist model of Europe is unsustainable. Cuts in spending will eat into the generous welfare benefits and bloated government machine. I have not seen much labour reform in Europe to see growth. The problem is that the core of Europe; Germany and France, are socialistic governments. They will never dismantle the powerful labour unions, nor will they allow free movement of labour from outside the EU so that wages can be kept low and productivity rise. The core of Europe is rotten by socialism. It cannot reform itself into a capitalist model like the US, Singapore or China’s. Higher taxes and lower government spending without fundamental reform will plunge the EU into deep recession again for several years.
Do travel to Europe to see how “hard” they work. Annual leave in France is around 30 – 40 days a year. Their shops close at 6pm, at a time when most people are free to shop. It is very difficult to fire workers so bosses are afraid to hire. If you don’t have a job, your dole is almost 30 – 50% of your last drawn for 2 years. Why work? Taxes are 40 – 50% at the highest tier… no wonder they are in trouble. The Spaniards start work at 10am and take a Siesta from 12 – 3pm. Then they start work from 3 and end at 7. But according to my relative who lives in Europe, they don’t work much after siesta! I can’t see the light in their region. They have a long proud history… but they are living in past glory.
4. China’s Heavy Investment Spending Will End
The rail way mishaps over the last 2 months brought to light the extent of the corruption of Chinese officials. A large part of the investment spending has been “leaked”. One only has to look at how many Chinese citizens are buying properties to know where money has flowed to. The Chinese banks lend to provincial governments which in turn is supposed to be channeled into infrastructure spending. Up to 30% of this loan may turn bad. I won’t be surprised if several Chinese banks are insolvent and become nationalized in the next 3 years.
But this is not what will bring the Chinese economy down. The Chinese economy is driven by 30% investments, 40% consumption, 10 – 20% net exports. Is this sustainable? Their biggest customers, the EU and the US, are spending less. Wages in the wealthy coastal cities are rising so fast that manufacturers are shifting either to the western regions or out of China entirely. Their transition from an export driven to a consumer driven model has come very late, at a time when the US and EU have stalled. Investments have been filling in the gap but it will eventually create a bubble (i.e. bridges and highways to nowhere). If investments were to be slowed, China’s GDP growth could drop below 8% and the proverbial s**t will hit the fan.
Conclusion
A lot of people ask me, “How can the stock market crash when interest rates remain so low?” I can only say that “it’s the economy, stupid” (famous words of former US president Bill Clinton when he explained how he won the re-election by a landslide despite being embroiled in a “cigar smoking” incident with a fat intern). The US, EU and Japan will continue to print money to shock their economies to life. But eventually QE will not stimulate investments. Low interest rates will only stimulate borrowing and investments if there’s demand, and there ain’t no demand now, baby.
As Marc Faber said, the coming rebound in stocks may not be as high or last as long as most people would like. If there’s another QE, we could have a Merry Christmas and a Happy New Year, stretching even to a Happy Chinese New Year. But after that, reality will hit us. The next recession will be longer, deeper, sharper than ever before. And QE may not work this time. 2013 – 2014 may be 2 very bad years.
What is the reason for my pessimism that we are at the 80th minute of a soccer game with probably no extra time left? Here’s why:
1. The US Has To Pay It’s Credit Card Bill for the Next 10 Years
From 1990 – 2007, consumer spending has been fuelled by debt. Savings rate of the Americans fell from 15% in around the late 80s to around 2.5% in 2007. American households have been re-mortgaging their homes to get credit. It was greatly helped by a real estate bubble spanning 2 decades that finally burst in 2008. With the property likely in the doldrums for the next 1 – 2 years, and US banks unlikely to be so generous in their lending again (mind you, you could buy a property with 5% down payment in the good ol’ days. If your credit rating is spotless, you can buy even with no down payments). This means that the US consumer is unlikely to spend as much as they did for the next 3 – 5 years, until savings rate reach around 15% again. How are the Asian economies with their export driven model able to grow at double digits if their biggest customer is on a cost cutting mode?
2. Baby Boomers in the US and EU Have Finally Hit Retirement Age
2010 – 2020 is the decade where most baby boomers hit retirement age. Pension funds will have to liquidate billions, if not trillions worth of shares and bonds to fund the retirement. It will create unprecedented pressure on risk assets this decade.
3. Austerity Measures Will Cause Eurozone to Plunge into Deep Recession
The socialist model of Europe is unsustainable. Cuts in spending will eat into the generous welfare benefits and bloated government machine. I have not seen much labour reform in Europe to see growth. The problem is that the core of Europe; Germany and France, are socialistic governments. They will never dismantle the powerful labour unions, nor will they allow free movement of labour from outside the EU so that wages can be kept low and productivity rise. The core of Europe is rotten by socialism. It cannot reform itself into a capitalist model like the US, Singapore or China’s. Higher taxes and lower government spending without fundamental reform will plunge the EU into deep recession again for several years.
Do travel to Europe to see how “hard” they work. Annual leave in France is around 30 – 40 days a year. Their shops close at 6pm, at a time when most people are free to shop. It is very difficult to fire workers so bosses are afraid to hire. If you don’t have a job, your dole is almost 30 – 50% of your last drawn for 2 years. Why work? Taxes are 40 – 50% at the highest tier… no wonder they are in trouble. The Spaniards start work at 10am and take a Siesta from 12 – 3pm. Then they start work from 3 and end at 7. But according to my relative who lives in Europe, they don’t work much after siesta! I can’t see the light in their region. They have a long proud history… but they are living in past glory.
4. China’s Heavy Investment Spending Will End
The rail way mishaps over the last 2 months brought to light the extent of the corruption of Chinese officials. A large part of the investment spending has been “leaked”. One only has to look at how many Chinese citizens are buying properties to know where money has flowed to. The Chinese banks lend to provincial governments which in turn is supposed to be channeled into infrastructure spending. Up to 30% of this loan may turn bad. I won’t be surprised if several Chinese banks are insolvent and become nationalized in the next 3 years.
But this is not what will bring the Chinese economy down. The Chinese economy is driven by 30% investments, 40% consumption, 10 – 20% net exports. Is this sustainable? Their biggest customers, the EU and the US, are spending less. Wages in the wealthy coastal cities are rising so fast that manufacturers are shifting either to the western regions or out of China entirely. Their transition from an export driven to a consumer driven model has come very late, at a time when the US and EU have stalled. Investments have been filling in the gap but it will eventually create a bubble (i.e. bridges and highways to nowhere). If investments were to be slowed, China’s GDP growth could drop below 8% and the proverbial s**t will hit the fan.
Conclusion
A lot of people ask me, “How can the stock market crash when interest rates remain so low?” I can only say that “it’s the economy, stupid” (famous words of former US president Bill Clinton when he explained how he won the re-election by a landslide despite being embroiled in a “cigar smoking” incident with a fat intern). The US, EU and Japan will continue to print money to shock their economies to life. But eventually QE will not stimulate investments. Low interest rates will only stimulate borrowing and investments if there’s demand, and there ain’t no demand now, baby.
As Marc Faber said, the coming rebound in stocks may not be as high or last as long as most people would like. If there’s another QE, we could have a Merry Christmas and a Happy New Year, stretching even to a Happy Chinese New Year. But after that, reality will hit us. The next recession will be longer, deeper, sharper than ever before. And QE may not work this time. 2013 – 2014 may be 2 very bad years.
Monday 1 August 2011
A Father's Rules for Finding Fulfillment
This is one of the most touching story I've heard. Even more touching are the words from Paul. It's almost as touching as the poem called, "If" by Rudyard Kipling. Read on...
http://sg.yahoo.matchmove.com/news/article/a-fathers-message-from-beyond-the-grave
A FATHER'S RULES FOR FINDING FULFILLMENT
Be courteous, be punctual, always say please and thank you, and be sure to hold your knife and fork properly. Others take their cue on how to treat you from your manners.
Be kind, considerate and compassionate when others are in trouble, even if you have problems of your own. Others will admire your selflessness and will help you in due course.
Show moral courage. Do what is right, even if that makes you unpopular. I always thought it important to be able to look at myself in the shaving mirror every morning and not feel guilt or remorse. I depart this world with a pretty clear conscience.
Show humility. Stand your ground but pause to reflect on what the other side are saying, and back off when you know you are wrong. Never worry about losing face. That only happens when you are pig-headed.
Learn from your mistakes. You will make plenty so use them as a learning tool. If you keep making the same mistake or run into a problem, you’re doing something wrong.
Avoid disparaging someone to a third party; it is only you who will look bad. If you have a problem with someone, tell them face to face.
Hold fire! If someone crosses you, don’t react immediately. Once you say something it can never be taken back, and most people deserve a second chance.
Have fun. If this involves taking risks, so be it. If you get caught, hold your hands up.
Give to charity and help those who are less fortunate than yourselves: it’s easy and so rewarding.
Always look on the upside! The glass is half full, never half empty. Every adversity has a silver lining if you seek it out.
Make it your instinct always to say ‘yes’. Look for reasons to do something, not reasons to say no. Your friends will cherish you for that.
Be canny: you will get more of what you want if you can give someone more of what they desire. Compromise can be king.
Always accept a party invitation. You may not want to go, but they want you there. Show them courtesy and respect.
Never ever let a friend down. I would bury bodies for my friends, if they asked me to . . . which is why I have chosen them carefully.
Always tip for good service. It shows respect. But never reward poor service. Poor service is insulting.
Always treat those you meet as your social equal, whether they are above or below your station in life. For those above you, show due deference, but don’t be a sycophant.
Always respect age, as age equals wisdom.
Be prepared to put the interests of your sibling first.
Be proud of who you are and where you come from, but open your mind to other cultures and languages. When you begin to travel (as I hope you will), you’ll learn that your place in the world is both vital and insignificant. Don’t get too big for your breeches.
Be ambitious, but not nakedly so. Be prepared to back your assertions with craftsmanship and hard work.
Live every day to its full: do something that makes you smile or laugh, and avoid procrastination.
Give of your best at school. Some teachers forget that pupils need incentives. So if your teacher doesn’t give you one, devise your own.
Always pay the most you can afford. Never skimp on hotels, clothing, shoes, make-up or jewellery. But always look for a deal. You get what you pay for.
Never give up! My two little soldiers have no dad, but you are brave, big-hearted, fit and strong. You are also loved by an immensely kind and supportive team of family and friends. You make your own good fortune, my children, so battle on.
Never feel sorry for yourself, or at least don’t do it for long. Crying doesn’t make things better.
Look after your body and it will look after you.
Learn a language, or at least try. Never engage a person abroad in conversation without first greeting them in their own language; by all means ask if they speak English!
And finally, cherish your mother, and take very good care of her.
I love you both with all my heart.
Daddy x
http://sg.yahoo.matchmove.com/news/article/a-fathers-message-from-beyond-the-grave
A FATHER'S RULES FOR FINDING FULFILLMENT
Be kind, considerate and compassionate when others are in trouble, even if you have problems of your own. Others will admire your selflessness and will help you in due course.
Show moral courage. Do what is right, even if that makes you unpopular. I always thought it important to be able to look at myself in the shaving mirror every morning and not feel guilt or remorse. I depart this world with a pretty clear conscience.
Show humility. Stand your ground but pause to reflect on what the other side are saying, and back off when you know you are wrong. Never worry about losing face. That only happens when you are pig-headed.
Learn from your mistakes. You will make plenty so use them as a learning tool. If you keep making the same mistake or run into a problem, you’re doing something wrong.
Avoid disparaging someone to a third party; it is only you who will look bad. If you have a problem with someone, tell them face to face.
Hold fire! If someone crosses you, don’t react immediately. Once you say something it can never be taken back, and most people deserve a second chance.
Have fun. If this involves taking risks, so be it. If you get caught, hold your hands up.
Give to charity and help those who are less fortunate than yourselves: it’s easy and so rewarding.
Always look on the upside! The glass is half full, never half empty. Every adversity has a silver lining if you seek it out.
Make it your instinct always to say ‘yes’. Look for reasons to do something, not reasons to say no. Your friends will cherish you for that.
Be canny: you will get more of what you want if you can give someone more of what they desire. Compromise can be king.
Always accept a party invitation. You may not want to go, but they want you there. Show them courtesy and respect.
Never ever let a friend down. I would bury bodies for my friends, if they asked me to . . . which is why I have chosen them carefully.
Always tip for good service. It shows respect. But never reward poor service. Poor service is insulting.
Always treat those you meet as your social equal, whether they are above or below your station in life. For those above you, show due deference, but don’t be a sycophant.
Always respect age, as age equals wisdom.
Be prepared to put the interests of your sibling first.
Be proud of who you are and where you come from, but open your mind to other cultures and languages. When you begin to travel (as I hope you will), you’ll learn that your place in the world is both vital and insignificant. Don’t get too big for your breeches.
Be ambitious, but not nakedly so. Be prepared to back your assertions with craftsmanship and hard work.
Live every day to its full: do something that makes you smile or laugh, and avoid procrastination.
Give of your best at school. Some teachers forget that pupils need incentives. So if your teacher doesn’t give you one, devise your own.
Always pay the most you can afford. Never skimp on hotels, clothing, shoes, make-up or jewellery. But always look for a deal. You get what you pay for.
Never give up! My two little soldiers have no dad, but you are brave, big-hearted, fit and strong. You are also loved by an immensely kind and supportive team of family and friends. You make your own good fortune, my children, so battle on.
Never feel sorry for yourself, or at least don’t do it for long. Crying doesn’t make things better.
Look after your body and it will look after you.
Learn a language, or at least try. Never engage a person abroad in conversation without first greeting them in their own language; by all means ask if they speak English!
And finally, cherish your mother, and take very good care of her.
I love you both with all my heart.
Daddy x
Investment Outlook for Second Half of 2011
As I was scanning through my blogs I came across this entry that I wrote last year, about a year ago.
http://musingsonwallstreet.blogspot.com/2010/08/investment-outlook-2nd-half-2010-2011.html
I said that the equity market will surprise many and break new highs until first quarter 2011. I was absolutely spot on because stocks peaked in May 2011. However, I think I'll be wrong with regards to a recession coming in end 2011 or beginning 2012. I now think that it will probably be in 2013.
Here's why:
1. The US debt ceiling will be raised. In whatever form, whether it be Obama not getting the ceiling raised enough to last through his Nov 2012 elections or if it only lasts for 6 months.
http://www.bloomberg.com/news/2011-07-31/white-house-republicans-said-to-reach-tentative-deal-on-u-s-debt-ceiling.html
2. US government debt may be downgraded finally. This will cause a knee jerk drop in stock markets, which will be a buying opportunity. It will be a semi-permanent rise in borrowing cost for the Americans which will cause their stocks to tank and their economy to grow slower since their cost of capital will rise. But as long as they don't default, the world's financial system will continue.
3. There is always the option of QE3 if inflation falls to near 0.5%. This will propel stocks for another 6 months into early 2012.
4. The Eurozone's debt problem would have been avoided until 2013. When Europe's economic growth slow sufficiently, the debt problems of Portugal, Greece, Ireland, Spain and Italy will resurface. Germany and France may decide that it is too costly to continue to bail out the smaller countries... thereby allowing them to default.
5. Company 2nd quarter earnings so far show that 80% are above expectations. Asia and Emerging Markets are powering this global growth.
I will be very cautious going into the middle of 2012 because China's GDP may eventually dip below 7% and land hard... Eurozone may burst. After Obama's re-election, he will have to make all the hard decisions to curb spending, thereby pulling down the US' economy.
My preferred asset allocation is now 40% equities, 25% commodities, 15% Templeton Global Total Return Bond Fund SGD Hedged, 20% Amundi Volatility World + Winton Futures.
http://musingsonwallstreet.blogspot.com/2010/08/investment-outlook-2nd-half-2010-2011.html
I said that the equity market will surprise many and break new highs until first quarter 2011. I was absolutely spot on because stocks peaked in May 2011. However, I think I'll be wrong with regards to a recession coming in end 2011 or beginning 2012. I now think that it will probably be in 2013.
Here's why:
1. The US debt ceiling will be raised. In whatever form, whether it be Obama not getting the ceiling raised enough to last through his Nov 2012 elections or if it only lasts for 6 months.
http://www.bloomberg.com/news/2011-07-31/white-house-republicans-said-to-reach-tentative-deal-on-u-s-debt-ceiling.html
2. US government debt may be downgraded finally. This will cause a knee jerk drop in stock markets, which will be a buying opportunity. It will be a semi-permanent rise in borrowing cost for the Americans which will cause their stocks to tank and their economy to grow slower since their cost of capital will rise. But as long as they don't default, the world's financial system will continue.
3. There is always the option of QE3 if inflation falls to near 0.5%. This will propel stocks for another 6 months into early 2012.
4. The Eurozone's debt problem would have been avoided until 2013. When Europe's economic growth slow sufficiently, the debt problems of Portugal, Greece, Ireland, Spain and Italy will resurface. Germany and France may decide that it is too costly to continue to bail out the smaller countries... thereby allowing them to default.
5. Company 2nd quarter earnings so far show that 80% are above expectations. Asia and Emerging Markets are powering this global growth.
I will be very cautious going into the middle of 2012 because China's GDP may eventually dip below 7% and land hard... Eurozone may burst. After Obama's re-election, he will have to make all the hard decisions to curb spending, thereby pulling down the US' economy.
My preferred asset allocation is now 40% equities, 25% commodities, 15% Templeton Global Total Return Bond Fund SGD Hedged, 20% Amundi Volatility World + Winton Futures.
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