Investment Owl Blog

Temporary move

2010-05-26T05:47:00.000-07:00

I have temporarily moved and merged this blog to:

http://alfietrade.wordpress.com

Reason for move is Blogger's lack of a Blackberry app and Wordpress's availability of a clean and functional Blackberry app. This new blog will be more than only stock trading but a wider range of topics. Non random thoughts.

Also follow me on twitter at www.twitter.com/alfietrade
or at
stocktwits

I still have my photo blog at:

http://spinshock.blogspot.com

Commodities are back incase you haven't noticed already

2009-05-19T13:18:00.000-07:00

Oil, gas, gold. Everything that has actual value as opposed to currencies.

The devaluing of the US dollar and massive injections of credit of the Obama administration to curb the downturn means the commodities trade is back on with a vengence.

Further, China is stockpiling oil and coal and other raw materials at current depressed prices.

With these two tail winds, I am long on oil and natural gas. I am playing oil with AET.un and USO. Gas, I am playing with UNG and KWK.

Two stocks on China

2009-05-05T08:25:00.000-07:00

The two stocks I want to focus on today is FXI and OCNF

FXI, a play on H-shares Chinese stocks listed in Hong Kong. The Hang Seng index has broken out past 16000 two days ago in a beautiful cup and handle chart formation. The 20dma is above the 50dma. All this on the back of strong economic data coming out of China. I am adding to my FXI holdings on pullbacks.

OCNF is a dry shipping company with a fleet of ships. This is a play on the China recovery story. Yesterday saw heavy volume over 20M shares traded on average volume under 2M. This is a $1.85 stock at the moment and extremely risky.

Messrs. Buffett and Munger on Math and Theories

2009-05-05T06:57:00.001-07:00

Excerpt from the Wallstreet Journal:

Messrs. Buffett and Munger made clear their complete disdain for the use of higher-order mathematics in finance.

"There is so much that's false and nutty in modern investing practice and modern investment banking, that if you just reduced the nonsense, that's a goal you should reasonably hope for," Mr. Buffett said. Regarding complex calculations used to value purchases, he said: "If you need to use a computer or a calculator to make the calculation, you shouldn't buy it."

Said Mr. Munger: "Some of the worst business decisions I've ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you, but it doesn't. They teach that in business schools because, well, they've got to do something."

Mr. Buffett said: "If you stand up in front of a business class and say a bird in the hand is worth two in the bush, you won't get tenure....Higher mathematics my be dangerous and lead you down pathways that are better left untrod."

Trading is like Farming

2009-05-01T01:03:00.000-07:00

An analogy I just thought about is farming. Being a trader and investor is very much like a farmer.

We only have so many seeds to sow (capital). We need to constantly decide where to sow our seeds.

Trader - Invest in short term or long term securities (short swing trade or longterm investment)

Farmer - Plant crops that grow quickly or slowly

Trader - Buy and sell at what price based on information and speculation

Farmer - Buy and sell seeds at what price, will the seed prices rise or fall? Sell your crops now because you think prices will fall, or sell later because you think prices will rise?

Trader - Take a percentage of annual gains away from trading account into savings account. For spending and for a rainy day

Farmer - Take a percentage of crops and keep it stored. Wheat, rice can be eaten should you expect a draught to feed the family.

Trader - Mr Market forces are strong. Many things you cannot control and can get wrong. The markets can be brutal and trades can always go against you

Farmer - Always at the mercy of Mother nature. The climate, floods, droughts, pests. All can destroy your hard work and leave you devastated.

Adding to shorts

2009-05-01T00:56:00.001-07:00

I have added a number of short yesterday. I am now net short. My biggest short positions is skf (long the bear financial) and tna (short the bull 3x etf). TNA is my favorite because it has been in a one month upward channel where it has been bouncing off a beautiful ascending channel. Further, it also hit a resistance of about $28 set 2.5months ago. The bottom of this channel is at $23.5.

Two Hedge fund managers I have the greatest respect for Doug Kass and Eric Bolling have also been selling into this strength in the markets and adding to shorts. This in addition to what I see in chart formations of what looks to be a temporary top on the markets (SPX 890) gives me additional confidence with my decision to go short.

The next leg down to 860 on the SPX is the near term target. Ideally, I would like to see the SPX start to form a downtrend. I don't expect the fall to be quick but also don't expect 760 to be breached.

For currencies, the EURUSD would be a great short should it fall below 1.3212 the 20dma line.

Getting a little short

2009-04-29T13:14:00.000-07:00

I haven't been making major trades and also have been staying low in trading.

The markets have been meandering back and forth. A terrible environment to trade except for scalping small hourly gains. Without any real trending in the broad markets, this environment has been very unfriendly for gains.

I am however getting a little short putting on small positions in skf and sds. The SPX rallied past resistance at 876 today after the FED announcement but the rally quickly faded. The risk/reward is now pointing slightly more to the down side.

I would caution however that the markets are churning back and forth. Put tight stops on positions and don't be worried about small losses if they are triggered.

Big money is made on the big moves and they will more than cover the small losses.

Stress test results are coming up on May 4. And I expect a sell off on the banks before the news from fear that some of them will required more funding.

Backing and filling

2009-04-06T13:36:00.000-07:00

I am not trading this market.

I am holding my core positions in oil and ag. aet.un and VT.

I also hold a trading position in gold. In kgc and au. Gold has taken a bit of a beating the last 3 days but I believe it is oversold and any meaningful pullback in the markets will see a big rebound in gold.

Otherwise trading in this market has been difficult. I have been trying to play the short side with SKF but the market has refused to go down so far. Last hour of trading has also seen much program trading pull the markets up. I've been taking small losses on SKF daily as I don't want to hold it overnight, but I am ready to pull the trigger and long SKF whenever there is indication that the market is ready for a fall.

Bulls power over the bears

2009-04-03T01:45:00.000-07:00

The markets gapped up in the morning and continued moving up until the afternoon until what looked like there might be a sell off. The markets tried to push through 845 on the S&P and when failed seesawed in to the close. A mild sell off in to the close about 15 minutes before close.

A rather tough day for me. I held small positions on two ultra shorts overnight and they both gapped down after the announcement that Mark to market accounting was going to be eased. SKF and SRS. I managed to half my losses in SKF by doubling down on dips. With SRS however I was not as lucky as it kept falling losing 9% when I had to cut my losses. SKF had resistance as financial firms tried to sell off.

On a day when financials are the reasons the market is up. The financials themselves sold off which everything else powered up.

On a brighter note. I sold my GOLD in KGC and AU just before market close the day before. I noticed weak volume in the GDX as it reached the top of the recent trading channel. This morning, GDX sold off hard to the bottom on that very channel where I picked up my shares in KGC and AU again.

After market, RIMM announced earnings and it was better than expected. The shares powered to $60 after market. I think this is way over done and suspect RIMM may have 'stuffed the channel' with products. They have also been aggressively pushing products such as the CURVE for free with contract. I am going to start a short on RIMM when markets re open.

S&P holds 780

2009-03-30T13:05:00.000-07:00

The S&P held 780 an hour before market closed. But the bounce off that level was weak. There has been some heavy put buying on WFC (Wells Fargo) and the weakness in financials prevented the S&P from making a stronger showing.

If 780 doesn't hold tomorrow, look for 750 to be the next strong support.

My holdings are minimal at the moment.

Core holdings of AET.un, VT, KGC and AU.

Trading position in spwrb and UWM.

Sold SKF today for 14pt gain from Friday.

I want to see the S&P test and hold 780 again tomorrow before building my positions again.

A real fight today beneath the surface

2009-03-26T13:01:00.000-07:00

The market may have looked calm or even too quiet today if you only looked at the one day chart of the S&P. But there was a real battle going on beneath the calm surface between the bulls and the bears.

All day, the S&P fought to break the strong resistance at 827. It broke it finally around midday only to fall back to 820. Financials started to fall and it looked from aspects that the S&P might retest 790 (which is the number I was hoping to see).

However, 820 has become staunch resistance and in the last hour of trading, the markets gained steam and finished the day firmly above 827 at 832. This is a fantastic showing for the bulls. The S&P is good for another 50-60pts to about 880 is my expectation at this point.

Solar stocks rocked up today with my single digit solar stocks gaining upwards of 40%. There was a report out on Bloomberg about China providing subsidies to people who wish to install solar systems. As I have written in the past, I have been holding SPWRB. I sold off some near the one day peak at $26.44 and a bit more as people took profits. I have now added back my position seeing how well the S&P has ended. I am anticipating a multiday rally should this rumor turn out to be true. I may however bail should this rumor turn out to be ...well, only a rumor.

I am holding tight to my gold (KGC and AU) at this point. My holding of FXI is also showing nice gains. These are core holdings.

I have no holdings outside the core holdings. I want to have better entry points before loading up on the financials again. They have been great winners for me this year and I must refrain from getting overly greedy. Never a good thing.

Current trade

2009-03-25T03:43:00.000-07:00

The markets powered higher on Monday followed by a light sell off yesterday.

I sold 2/3 of my SKF on Friday for about a 15% gain. The remaining 1/3 got stopped out on Monday in the 500pt DOW runup. I also covered a short on Baidu after it showed unwillingness to go down. This was a great exit as Baidu rocked to over $195.

I also sold a number of longs into the strength including UVM Ultra Long Russell 2000 ETF. It went up over 10% in a day and when making money becomes seemingly too easy and quick in the markets, its a sign that you need to slow down.

My plan is to ease back into the markets on pullbacks such as the one yesterday.

I am still about 40% long. Long in gold, oil, agriculture and China.

I am trading the FXI in and out. Holding a core position but buying on weakness and selling on strength.

I have no holdings in financials at the moment, but looking to get back into Wells Fargo WFC and Financial ETFs. Morgan Stanley showed great strength yesterday.

I caution not to chase this rally though. Earnings season is coming up around the corner starting about 2 weeks away. This period is usually very volatile and stocks that have fun up prior is likely to sell off.

I am sitting on 20% gains this year. So I am going to sit tight and and be more selective in my entry points for equities at this point.

The reinstatement of the Uptick rule may be around the corner. If it passes through, we could see the markets melt up 20%+.

Signs of financial exhaustion

2009-03-19T13:36:00.000-07:00

Financials have begun to sell off timidly today. A healthy sign after the massive runnup over the last 7 trading days.

Taking profits on my financial longs was a great decision in hindsight. Although I missed 5 points on my POT as it gapped up today! (can't win them all)

I am now shorting the financials by being long the SKF. Looking for 30% profit target on this that should happen within the next 2-3 trading days. Plan to get back in Long with WFC and IYF near support levels.

Also long gold with Kinross gold. Canadian company KPC. Another 7%+ gain today. It has ramped so fast I am feeling a bit shaky on this wanting to take profits. I'll see how it goes tomorrow but the FED's decision to massively print money has ignited a bull run on GOLD like I've never seen before. I'll probably sit tight on my holdings and look to continue to add positions on weakness. Added some AU today on weakness to my gold holdings.

Solar also up nicely today with my holdings of SPWRB, up almost 10% today. This one is very volatile so buyer beware.

Markets melted up after FED announcement today

2009-03-18T13:14:00.001-07:00

Big up day today after comments from the FED.

This was take action day and as the S&P hit 800, I took profits on over 2/3 of my longs.

I took profits off the financials which have seen massive gains the last few days. I think short term, they have run their course. Pigs get slaughtered in the markets and I have sold all my IYF and Wells Fargo for over 25% gains in less than a week. Even after the melt up, C and MS did not ramp and could not break the highs. This was a sign for me to sell the financials for now and get back in later.

Gold is up big and I continue to hold gold with my KGC (Kinross gold) holdings up over 10% in one day. The FED's announcement to buy treasuries is going to push gold to new highs. Watch Gold carefully and buy on dips.

Some technology shares also did not follow the rally. GOOG, RIMM, BIDU were mostly flat for the day. This was also a red flag for me to take profits.

I am still long on KFC, SPWRB, FXI, VT

SKF is also nearing $100 from a high of $267 just 5 days ago. Wish I held my short on this until now, sold out too fast. But financials have come up too fast too soon and I am looking at going long SKF below $103 (to short the financials at 2X leverage)

Exhaused from the rapid action and trading today, going to get some much needed rest....

DOW loses 200pts in afternoon trading

2009-03-17T07:28:00.001-07:00

The DOW sold off 200pts in afternoon trading yesterday. This sell-off is healthy and is necessary for any sustained rally.

I have added some long positions this morning on the dip.

Most hedge funds are still very poorly positioned for this rally. And if the bears are unable to push the markets down any more in a significant way (additional 200pt+ down days for the DOW). Look for more short covering and rapid change of sentiment from the investment community.

Asian markets also closed strong today. Japan was up nicely and my 7&i holdings made some nice gains.

Hong Kong also did very well with no major sell-off. Basically a flat day to take a breather after the recent run up.

Possible resistance S&P 793

2009-03-16T09:39:00.001-07:00

I'm watching the S&P at 793 to hit some resistance at its 50 day moving average.

Markets are having much resiliance so far but the bears won't let go this easy. Cramer had a piece out this weekend that most Hedge funds are very underinvested at this time and would certainly gun for a correction to load up on equities.

I am still firm on expecting a 200pt drop in the DOW very soon.

So I'm watching the 793 level on the S&P to take profits.

In the meantime, financials are strong but many have hit some hard resistance such as WFC at $15.

Friday close

2009-03-13T12:58:00.000-07:00

We are ending Friday slightly in the green.

A positive sign for the days ahead.

But I can't help but feel this might be a bull trap. If you look at the charts today, we were very range bound and traded almost perfectly to trend lines. No real big buyers in the market today, just traders yanking the markets back and forth.

Careful of a big pull back next week. Don't chase stocks. But the next big sell off will be the time to back up the truck and go long.

Have a great weekend.

Yawner

2009-03-13T12:11:00.001-07:00

Friday, today is the last trading day of the week. What a yawner today. Volume is very low and the markets are just treading along with no direction around the unchanged line.

My prediction of a 150pt+ drop doesn't look like is going to happen. But that is not to say it might not happen early next week. Bernanke is on 60minutes this Sunday and what he says (or not say) will likely caues some ripples in the market.

The bulls and bears are pretty much standing still today. Neither willing to commit cash before the weekend.

I am slightly long with holdings in POT, WFC, FXI, AET.UN and VT. I've also hedged slightly with a small holding of SDS (ultra short S&P).

I feel the urge to jump into the markets as this rally has legs. But I don't want to commit more cash unless the markets dip. Hopefully will happen early next week.

I'm looking at DOW below 7000 to aggresively add to my position. In the time being, the job of a good trader is to sit tight and not over trade.

Stewart doesn't know what he is talking about

2009-03-13T07:07:00.000-07:00

One of the hottest topics in the investing world is the 'Daily Show' aired yesterday with Jon Stewart interviewing Jim Cramer. Here's the link:

http://www.thedailyshow.com/full-episodes/index.jhtml?episodeId=220533

It is clear that Stewart is just trying to blow off some steam and unfair with Jim.

Jim provides a service to individual investors. He gives the inside scoop on Wall street and the workings that most of us just won't know otherwise. Does he have any idea how much valuable information Jim has given us through the years?

The whole financial mess is a combination of greedy bankers and frankly greedy politicians as well. Not the fault of CNBC and even less so Jim.

There are traders and investors. Some prefer to trade often, tracking the markets. Some don't want to look at it for years. CNBC provides information to all. Interviews and shows aimed for traders are not for the casual investors. Stewart doesn't even seem to understand that point.

Jim was way too nice on the show and unnecessarily apologized for false attacks from Stewart.

A fair day after yesterday's massive runnup

2009-03-11T11:41:00.000-07:00

The tape is playing perfectly to what I wrote yesterday. In the first 30 minutes of trade, the market was up rapidly and tested 7000 on the DOW. It has since drifted lower all day after.

I sold off my longs in the first 30 minutes and have since added some longs back during this retreat.

From my perch, the drift today is not bad at all. Volume is low and no major sell off after yesterday's massive gains.

The last hour will be crucial. If the indexes can finish solidly in the green it would be a great sign. If not, it might just drift around the unchanged line.

Either way, I think there will be a good chance there will be a 150-200pt down day on the DOW within the next two trading days. This would be a good time to reload on the long positions especially the financials.

The re-instatement of the uptick rule I believe is for real and the effect not to be underestimated.

Great quote from Tobin Smith's newsletter regarding investing in today's fearful markets

2009-03-11T03:22:00.001-07:00

As Ambrose Hollingworth Redmoon (deceased manager of the legendary rock bank, Quicksilver Messenger Service) aptly wrote:

"Courage is not the absence of fear, but rather the judgment that something else is more important than one's fear. The timid presume it is lack of fear that allows the brave to act when the timid do not. But to take action when one is not afraid is easy. To refrain when afraid is also easy. To take action regardless of fear is brave."

Nice close above 6900 on the DOW

2009-03-10T13:08:00.000-07:00

We were able to close above 6900, this is a great sign. I am now looking for a nice strong follow through day. Up day on strong volume.

But as I've stated in my previous post. I took profits just before the close as we rose above 6900 on the DOW. I sold off my SPY longs. And took half my shorts on the SKF. There is still a very high chance we will continue to rise tomorrow, but I will play cautious for now and take some profits.

If the markets rise again strong tomorrow morning, I plan to cover all my SKF shorts and sell a third of my FXI. This because I anticipate the DOW hitting resistance at 7000 and sell off. I will then rebuild my longs.

One very interesting piece of information I just heard on Bloomberg is that there is some strong talk about reinstating the uptick rule on shorts before the end of the month. This means one can no longer short a stock unless there has been an uptick. This will prevent the relentless pounding on stocks that has been so apparent with the bank stocks. This piece of information is crucial as it will carry the bank stocks up very rapidly. There will be a massive short covering should that happen.

I am looking to rebuild my SKF short near the $200 level. Hopefully if it gets there. I may also build a small TBT position as I believe money will flow out of treasuries to add to equity positions.

Games plan:

- Take profits on longs if we have a strong open within the first 30 minutes tomorrow

- DOW @ 6780 is where I will rebuild long positions.

- If we don't get a strong open, I will just build small long positions slowly as the markets retreat to each support level

Best of luck to all.

Take some profits

2009-03-10T10:55:00.001-07:00

I am looking at the 6900 level on the DOW today to unload some shares and lock in some profit. I have been long the S&P and short the SKF with solid profits in only two days. If the markets finish strong today, I am expecting a mild sell off tomorrow and then resume on a less violent bear market rally until the DOW and S&P reaches the downtrend lines.

My AET.un, VT and FXI are longer term holds so I may lighten a bit on them if the price continues to appreciate quickly. And then pick up some shares back when it falls back to support levels again.

Don't forget that this is a bear market rally we are going into now. Stay nimble, keep long positions small and manageable. And if you do go long, stick with solid themes such as Oil, Gas, China and agriculture.

Rebound or head fake?

2009-03-04T12:27:00.000-08:00

Markets up today after days of sell off. I am not chasing this rally though. It feels like a lot of short covering to me. But I am holding on to most of my longs but sold off some of my SSO into the strength. The markets may rally tomorrow but there are too many headwinds. Further, the financials and GE did not rally today. The Chinese stimulus is good news but probably not enough the sustain the markets to rally for a few more days. The unemployment numbers coming out of the US was horrible today and the market wants to rally so bad it kept blinders to the numbers.

What I am thinking in the back of my head is that a few notable perma bear hedge fund managers are coming out and calling for a market bottom.

Ultimately though, I stand firm in the belief that the market will bottom when the S&P 500 falls below 550. But this does not mean we head straight there. We could see a multi-day rally that takes us over 900 on the S&P first which no trader should miss out on.

I am holding tight to my FXI, agriculture and oils for now. Selling off a portion of my S&P longs (SSO).

Time to unload

2009-02-19T06:43:00.000-08:00

I am selling into today's strength. With the garbage stimulus plan and employment falling off a cliff. We are not at bottom yet. There is not much the Obama stimulus plan can do to turn the tide at the moment. Further, states are having budget problems, Eastern Europe is having credit problems (which will drag Western Europe down). Everyone needs money all of a sudden and only a few will be able to borrow. Some entities will be forced to raise bond rates to attract buyers (Spain) and this will further push and damage the already suffering economy.

I am selling into the strength BIDU, GOOG, RIMM, TBT. But keeping my FXI, VT and AET.un

Time to cover some shorts

2009-02-10T10:02:00.001-08:00

I am covering a bunch of shorts today after this Tim Geithner speech. As bad as I think he is as the new Treasury secretary, the markets are showing signs of a temporary bottom. As a trader, we can never fight the market despite longer term beliefs. Large instirutions are starting to pick at stocks so its time to ride this wave for a bit. I covered most GBP and EUR shorts and long FXI, BIDU, CTRP, TBT, VT, AET.UN. I also feel oil is bottoming so this is time to start loading up on Canadian oil trusts that have great management and already reduced their dividends substantially such at Arc Energy.

We enjoyed the boom cycle, now deal with the bust cycle

2009-02-02T12:34:00.000-08:00

Why are some things so simple, repeated again and again on TV. It is actually beginning to annoy me. Two of the most talked about topics on Bloomberg:

1) Banks are not lending even though they took in the TARP money from the government. And instead of lending, they are using the capital to shore up their balance sheets or make mergers and acquisitions.

The simple truth:
Of course they are! Banks are businesses out to make money, not provide social security. They lend you an umbrella when it is sunny. Not when it is raining. And certainly not when they need the umbrella themselves!

Business is bad and this economic tsunami is big. The bankers certainly know it. They are not going to lend if they know businesses are going to go 'out of' business 6 months from now. They know things are not going to get better no matter what the politicians say. TARP money or no TARP money. Get used to it. And all these portfolio managers and talking heads need to shut up about things getting better in the second half of 2009. This financial trouble we are in right now is so big that it is going to take at least 5 to 10 years to get through. They of course have an agenda to say it will get better soon because they want you to invest money into the markets not withdraw from it!

As for the banks using the TARP money to shore up balance sheets and make acquisitions. Of course they are going to do it. They are here to make money. Lending it to soon-to-be-bankrupt small businesses will lose them money. But scooping up distressed competitors will make them money.

2) Bailouts, stimulus package and more bailouts!

The simple truth:
Out economies are contracting from a level that was simply an inflated bubble. We were living in a world fueled by debt. Money borrowed from the future. Make no mistake about it. Whatever comforts, increasing standards of living and entitlement one may feel especially was created from debt. This is especially true for most Western and developed economies. There has been little real value created with the ever expanding service industry.

Now is the time to pay the price as this bubble has popped and will continue to deflate. All this rubbish talk from politicians around the world talking about 'fixing' the problem with more debt is ludicrous. First of all, excessive debt is what got us here in the first place. Second of all, this bust cycle we are in now is so big, that nothing these politicians do now can stop the tide in the short term. The only way is to suffer the pain in this bust cycle the same way we all enjoyed the boom cycle. Let companies fail. Deal with the layoffs, high jobless rates and home foreclosures. Values will decrease and then money will come back into the markets naturally when the prices have reached the right level. Things have been overpriced, too high and for too long. Now prices must come down for our economies to truly be healthy again and resume on an upward trajectory. Home prices, wages, standards of living have all been inflated and overshot to the upside. Now they must come down as part of a natural cycle.

Unfortunately politicians need votes in the short term. So they want short term solutions and push the real solution away which is short term pain for long term gain.

And as people, we have become accustomed to expect only good times. We feel entitled to a good life and ever increasing standards of living.

And this is the world that we live. And this will continue to prevent us from accepting the reality of the situation required to take on real solutions. So let’s just continue to talk about it on Bloomberg and maybe a miracle will happen. We'll wake up and this was all just a bad dream.

Obama did not bounce

2009-01-20T13:42:00.001-08:00

Obama bounce not happening. Indexes look like they are going to retest the lows and very possibly pierce them. Everyone needs to be exposed to the short side. Whether as a hedge to long term holds or to profit from the downside.

Obama rally coming?

2009-01-14T10:47:00.001-08:00

15th of January today. Obama's inauguration is only 5 days away. The markets are anticipating an Obama bounce. Much like the one when he won the election. Will this happen? I think it is very likely. For one thing, he's a great talker and has a way of instilling confidence in people. Seconly, the markets have sold off fairly hard the last 6 trading days so that sets up a perfect back drop for a few days of rally. If the markets don't pickup by Friday. It certaily will by Monday. Further, Citi is releasing their earnings early tomorrow and I believe the markets will rally because it has already priced in the worst in the short term. So I would cover any financial shorts. After Obama's inauguration, it is very hard to say. Will the markets continue to rally for a few more days or sell off on the news? I wish I knew the answer!

Currency Trends

2009-01-09T00:36:00.001-08:00

So far in 2009, currency trends feel like they are on 'reset'. The trends that have worked in the second half of 2008 are no longer working. Then, currency strengths were JPY>USD>EUR>GBP. So far this year, the cross rates have been in flux and difficult to grasp. So far for the first few trading days of the year, the strengths are AUD>CAD>EUR>USD>GBP>JPY.

Happy trading

Investing Ideas for 2008

2008-04-14T04:07:00.000-07:00

The Best investment ideas for 2008

1) Taiwan

The recent election of Ma Ying-jiu as the next president of Taiwan. An anti-corruption and pro-China candidate is set to reverse the deteriorated relations that his predecessor Chen Sui-bian had created. Ma Ying-jiu has already made it his agenda to improve relationships with Beijing and loosen and increase trade between Taiwan and China. As a gesture, Beijing plans to remove half of the missiles that are currently aimed at Taiwan.

The better relations will bring many benefits:

Currently laws in Taiwan has it that Taiwanese companies may only move up to 40% of manufacturing onto the mainland. Should these laws be loosened, the immediate benefactors will be Taiwanese export companies as their manufacturing costs will go down. This will be an immediate boost to their near term financial results.

As Jim Rogers has articulated. Taiwan may become an island paradise for Chinese tourists. Tourism is sure to increase as travel restrictions are loosened.

The Taiwanese Dollar is also on a rise. It has already risen 10% against the American dollar since January of this year but still lags behind the Euro which has risen 15%. The Euro has risen tremendously in the last few years not so much because it is the most attractive currency but more so because investors need a major currency to hide away from the depreciating American dollar. Until the Chinese Yuan becomes freely convertible and accessible for foreigners, The Taiwan dollar is a good alternative to place your chips on Chinese growth and to diversify away from the American dollar.

The easiest way to invest in Taiwan is through the Exchange traded fund listed on the NYSE as EWT. Buying EWT presents two advantages. One, is you are buying and believing in future growth of the Taiwan economy, no need to pick and risk in specific companies. Second, it is a hedge against the US dollar as the assets that EWT buys are Taiwanese stocks priced in Taiwanese dollars. Therefore, should the US dollar fall further against the Taiwanese dollar, the assets (and thus EWT) will increase in price since EWT is priced in US dollars.

2) Australian Dollar

Australia, just like Canada, Norway, Argentina, Saudi Arabia etc are mainly resource based economies. Meaning that the staple of their economies are on the natural resources that they sit on. Oil, timber, wheat, metals, soybeans, whatever they may be, these economies have seen a strong comeback in recent years due to the much increased demand and high commodity prices that have followed.

I have previously favored the Canadian dollar which has risen over 60% against the US dollar over the last 7 years. The Canadian dollar has also historically traded at a 10% premium to the Australian dollar. Meaning one Canadian dollar has historically fetched $1.10 Australian. This trend has recently been broken and as of this writing, one Canadian only fetched $1.05 Australian. I see two reasons for this sudden surge in the value of the Australian dollar:

Firstly, the Australian dollar is yielding 7% versus the Canadian dollar at 3.25%

Secondly, as increasing world trade and focus is shifting from the US to Asia and China. Australia is set to benefit. Canada is highly dependent on the US in her economy. Whereas Australia is more on her Asia and pacific rim partners. Australian prime minister Keven Rudd recently was on the Chinese island of Hainan to meet with Chinese leaders. There, he made a speech in mandarin! And fairly good mandarin at that. He is a prime minister that understands well that his countries economic well being is highly inter-dependent with Asia's. Australia is sure to benefit from these ties and future projects and business trade over similar economies such as Canada.

This is also a hedge against the falling US dollar.

3) Solar, Wind and other alternative energy

A recent survey by Tobin Smith's Changewave Alliance research shows Solar power to be an overwhelming first choice for alternative energy source. The reasons are obvious. Solar power is plentiful and unlike ethanol, it doesn't take away from other needs such as corn for food. A quick search and filtering will show that eight out of every ten Solar companies are in China. Germany and US companies are also at the cutting edge. Many governments around the world are encouraging the use of Solar and providing tax incentives to do so.

I see solar as the next 'leadership industry group' a term used by the Investors Daily group. Some of the front runners in this space are FSLR, JASO, SOL and LDK all listed on NASDAQ and NYSE.

4) Agriculture

For those who follow the markets, the word 'Ag' should not be unfamiliar because Agriculture companies have seen a rise especially over the last two years. But this trend of growing demand for food is set to continue and some of the companies best set benefit from this bull market are POT, VT and MON. ETFs are also available, DBA and JJA listed on the NYSE

5) Water

World wide water shortages is becoming serious and many Water distillation companies and filtration companies are set to benefit. The best way to invest in this space is through ETFs such as PHO listed on NYSE

6) China

The Shanghai stock market has seen a 50% haircut since its peak in early November of 2007. The hit has mainly been due to a pull back from over extended levels and a pullback in the US which many still believe will have large effects on the Chinese economy. Where people stand varies on this but my understanding is that the two economies are not as correlated as people think. Sure, a slowdown in the US will affect the world, but it won't stop the rest of the world at its track. A slowdown in the US economy should cut 3% of GDP from China's 9%+ GDP growth at most. Internal demand is also strong. I therefore encourage all to begin investing in China if you have not so already. The best way is through FXI traded on NYSE which is a basket of Chinese H stocks listed on the Hong Kong stock exchange.

7) Supermarkets

Supermarkets are great investments during a recession. Some of the best supermarket chains around the world are Seven Eleven and Carrefour. Both very competitive and doing well in international markets outside of their home markets. Seven Eleven is wholly owned under Seven and I in Japan under the ticker symbol 3382. Carrefour is traded in France.

Middle East Tension

2006-07-16T10:01:00.000-07:00

Almost immediately after I made the call that oil has made a temporary peak, trouble breaks out in the middle east between Israel and Lebanon. Oil almost immediately broke the old high and is currently settled at $77. I guess that's the risk of putting my neck out and making a call. I will continue to monitor the price action of crude prices to determine if it is wise to be long again in oil.

But one thing worth noticing is that the price of Crude stocks in service and exploration are still 10% or more below their peak when crude prices reached $75 previously in May. What this tells us is that investors do not believe that the current crude prices are sustainable long enough for oil companies to benefit. In other words, the current spike in crude prices is temporary due to uncertainty of war between Israel and Lebanon. There is at least a $15 war premium built in to the price of crude today.

Further, the liquidity problem today has dampened speculation capital. Another reason worth noting for the continuous decline in equity prices.

Apple computers has been a favorite short of mine recently. The volume and price action of this stock is not bad for trading. I've been shorting it on and off since it was about $60. It closed at $50.67 this Friday. The problems of Apple are many and beyond the scope of this entry but I'd thought I'd mention what I've been doing in the markets recently.

Middle East Tension

2006-07-16T09:36:00.000-07:00

Almost immediately after I made the call that oil has made a temporary peak, trouble breaks out in the middle east between Israel and Lebanon. Oil almost immediately broke the old high and is currently settled at $77. I guess that's the risk of putting my neck out and making a call. I will continue to monitor the price action of crude prices to determine if it is wise to be long again in oil.

But one thing worth noticing is that the price of Crude stocks in service and exploration are still mostly over 10% off their May 10th peak. What this tells investors is that Buyers do not believe that the current crude prices are sustainable long enough for oil companies to benefit. In other words, the current spike in crude prices is temporary with a large war premium built in.

Further, the liquidity problem today has dampened speculation capital. Another reason worth noting for the continuous decline in equity prices.

Apple computers has been a favorite short of mine recently. The volume and price action of this stock is not bad for trading. I've been shorting it on and off since it was about $60. It closed at $50.67 this Friday. The problems of Apple are many and beyond the scope of this entry but I'd thought I'd mention what I've been doing in the markets recently.

Oil has peaked ....for now

2006-07-11T04:38:00.000-07:00

Yes, you read that right. I have been an oil bull for over 2 years but it is my belief that oil has reached a temporary peak. The peak was reached on 7th July 2006 at $75.78 per barrel of light sweet crude. My only reservation to this prediction is if war breaks out somewhere, or there is escalation of troubles in the middle East. Based on fundamentals, oil prices have peaked.

What this means is that prices at the pump will ease.

My prediction is based on a number of indicators:

- Slowing of the US economy. This will affect even China. US spending has fueled much of the growth in the worlds economy in services and products. A large percentage of Chinese growth is in selling products to the US. When the customer reduces buying, the shop surely will feel the pain
- Demand destruction of high oil prices is becoming evident
- Tightening of worldwide monetary policy. Reduced liquidity worldwide will keep speculation money in check
- Technical analysis of crude prices over the last two months with action on Friday 7th July critical
- Marginal increase in Supply due to high prices motivating maximization of old oil wells, Canadian Oil Sand coming online and increased drilling worldwide

The peaking of prices is ofcourse only temporary. It is still my firm belief that we are in a long term commodity bull market for at least the next 10 years. We are only in the early stages but as in all bull markets they are never without temporary set backs.

Nardelli needs to go

2006-07-07T06:28:00.000-07:00

I have never invested in Home Depot but having watched Nardellis' (CEO) interview with Maria on CNBC, my impression of him could not be worse.

His demeanor and avoidance to answering the questions asked was pathetic. What I found most annoying about him was his repeated use of the word 'Again' to precede ever answer as if he was asked to repeat himself.

For a guy from GE trained by Jack Welch, this guy is pathetic. Robbing the companies vaults and mistreating the shareholders.

Nardelli needs to go. The day Nardelli announces his resignation is the day to buy Home Depot.

The History of Wall Street

2006-06-24T11:25:00.000-07:00

I am about to finish reading a fascinating book called 'The Plungers and the Peacocks' by Dada L. Thomas. The author through his research presents the history of Wall Street from its inception to the infamous Tech bust at the turn of the century. The stories are intriguing and grips the reader from page to page.

As a student of history, I am a big believer that history needs to be studied and remembered to avoid the same catastrophes from re-occurring. The chapters on the Crash of 1929 and the following Great Depression are must reads for any student of the markets. According to the author, the event that preceded the Crash was a liquidity problem. The US government at the time had just begun to implement measures to halt credit from being to easily loaned to brokers and stock traders. Further, interest rates were on a rise at the time. The liquidity problem eventually lead to the crash where fortunes were wiped out, many people unable to handle the shock committed suicide and there was panic everywhere. A ten year depression followed in which the economy suffered and the market continued to fall. Many a veteran trader who escaped the crash of 1929 unscathed returned to the market shortly after to buy 'at the low'. The way it has worked for them so many times in the past. Unfortunately, the unforgiving markets continued its slide and wiped them out also.

Could history repeat itself in today's sophisticated markets and watchful government regulations? Nobody knows for sure, but to completely ignore the possibility would be foolish. May 10th 2006 was the day the US markets begun to fall. Gold had hit a high of $740 and commodity futures and stocks were at all time highs. The big sell-off was followed by markets all around the world. Many blamed new Fed reserve chairman Ben Bernanke for his stance on further interest rate hikes. However, the real reason lay beneath the surface. The real reason was the reduction of liquidity by the Bank of Japan of 200 billion dollars. Some resemblance to 1929? As a result of the reduction of liquidity, investors especially large hedge funds have been liquidating their holdings, unleashing a big wave of selling.

The market hit what may be a temporary bottom a week ago and is currently showing a small rebound. The bigger question is whether markets will continue to fall. Interest rates are rising in the US and worldwide. Liquidity will continue to be a problem The housing boom in the US which has been driving most of the economic activity in the last 4 years is slowing. Oil prices are rising and consumers, already debt ridden are pushed harder than ever before. Experts argue that economic activity continues to look strong but I would argue that things look the best just before they turn south. Looking forward, investors need to be mindful of the lessons from the 1929 crash in our current investment climate.

Bill Gates to retire in 2 years

2006-06-16T13:24:00.000-07:00

It has been exactly one year since I last updated. I apologize for the lack of updates. I have been busy and travelled for 9 months over the last year and in the process observed the economies and culture of many countries. I hope to share some of those thoughts on this blog in the future.

And to today's topic:

Bill Gates announced last night that he will be retiring from Microsoft in a couple of years. The Microsoft empire has obviously changed the world and the way we live. But many question where Microsoft is heading. With Google leading the internet advertising space and leading the next generation of on demand software and web-based software. Can Microsoft remain King for much longer?

Bill Gates is a legend. He will be remembered as one in the tech world as well as the most generous philanthropist in history. He is a great visionary and a great man.

I think the bigger question for Microsoft is Steve Balmer and the rest of the top management and architects. If they can innovate and mobilize Microsoft to be nimble, they have a great chance to remain on top in the next change wave of software technology. If they cannot, the departure of Bill Gates may be remembered as the day Microsoft turns south

Gushing with oil? Oil reaches new highs

2005-06-17T22:31:00.000-07:00

The price of light sweet crude reached new highs today at over $58 a barrel. For those of you who followed my advice in my March 23rd blog entry 'Oil Investments' will have made a nice 20% gain on XLE (Energy ETF). In that entry, I suggested accumulating shares of XLE when a barrel of oil corrects below $38. Oil retreated during the months of April and May and by mid-May, Oil was below $38. XLE fell below $37 on May 16th and today closed at $45.84.

My prediction is that oil will continue its streak and peak beyond $60 before retreating back to the low 50's. People have to understand that the days of cheap oil are days gone by. We have to get used to living in a world with high energy prices in a larger 10-15 year commodities boom cycle. We are in a demand driven oil boom with tight supplies. Add in the terrorism factor and natural oil disruption factor (such as hurricanes in the gulf of Mexico), we get the high prices of oil we have today.

In the past Saudi Arabia has had the ability to significantly increase their oil production overnight. This is no longer the case: at least not with sweet crude. They are able to increase the production of sour crude only. What is the difference? Sweet crude is more expensive than sour crude and the problem is that most refineries in the USA does not have the infrastructure to refine sour crude. The end result is that sour crude supply may increase but it will not affect increases of price at the pump.

This handicap at most refineries creates a huge opportunity for refineries that can refine sour crude as the gap between sweet and sour crude prices widen. They are able to sell the final petroleum products at the same high prices as others while purchasing their crude at a discount.

One of the biggest sour crude capable refiner in the US is Valero Energy (VLO). This stock has risen from as low as $56 from the sell off in May to the current $80. This company has a great balance sheet, good management and leveraged to the price of oil. I would recommend picking up shares when oil pulls back as anticipated in the near future.

Collusion in Real estate?

2005-05-16T01:13:00.000-07:00

The information super highway has dramatically upended the way many businesses operate: particularly profit margins. Retailers now have to compete with online retailers and eBay. The competition drives prices down and the consumer wins. Stock brokers have to compete with online brokers with trading costs that are a fraction of what they used to be. Again, the consumer wins. Auto salesmen now have to compete with previously unavailable information to the public such as manufacturer rebates and dealer costs. They can no longer charge outrageous prices because consumers know when they are getting ripped off.

These are only three examples. But how about the real estate industry? In the US, real estate agents charge a 6% fee on the closing price. In Canada, agents charge 7% on the first $100,000 and 1.5% on the remaining balance. These fees have not dropped and those in the industry continue to enjoy such fat margins. The question I have in my mind is how this strong hold has resisted what so many other industries could not. I speculate some possible reasons:

- Selling and buying homes are very personal. The crew on Fox's 'Cavuto on Business' jumped on guest Tom (a real estate agent) this week about the non competitiveness of the industry. Tom argued that buyers and sellers get security because agents can screen the buyers. He also argued that commissions have dropped from 6% to 5% but that is despite the average home value rising from $200K to $800K

- Selling a home is unlike selling stocks. The buyer has to enter and view the home. This aspect cannot be done online.

- Listings online are limited

- The industry is doing whatever it can to maintain the status quo by minimizing the possibility of competition

The realestate market has been booming the last 4 years. When everyone is making money, they don't necessarily question the fees that they have to pay. However, as the market slows and less profit is made, people will begin to question the value that they got for the fees that they paid. This is especially true for homes that practically sold by themselves the day they were listed.

The boom has also encouraged many to become agents. This will increase the competition and lower prices. 1% flat agent fees have already begun to be popular and this should become the norm in the future. A slowing market should also result in slashing fees as more agents fight for reduced deals.

Jim Rogers - Riverside Conversation 2

2005-04-28T19:14:00.000-07:00

I've got some great stuff here. A thought provoking conversation between Jim Rogers, Marc Faber and Anthony Burgmans on the economies of Europe and where they may be heading. This cannot be missed!

Go here. And click on the video link on the right (the second one down is the high bandwidth video)

Find out about Jim Rogers here.
Find out about Marc Faber here.

Whiplash

2005-04-21T22:05:00.000-07:00

Feeling some pain in the back of your neck? That's how I feel after the whipsaw action in the markets this week. Down big one day and then up big the next. If you are trying to time this market - good luck. I don't think anyone can and I pity the TV commentators who have to change their tone everyday. Sounding bullish on one and bearish on another. What I don't like are analysts who caution viewers not to buy after a bad day and then say 'I told you to buy' after an up day.

A recap of the whipsaw action the past five trading days:

Friday - Markets down big. DOW down 191 pts, Nasdaq down 40 pts. This was capitulation but many thought this was only the first stage of capitulation and that a second and final sell off would take the DOW down to 9800 pts.

Monday - Markets ended flat. The bounce that some predicted did not happen. Maybe this was just a break before the second leg down.

Tuesday - UP day! DOW up over 50 pts and Nasdaq up 20pts. Maybe we are out of the woods? Maybe the bottom has been reached on Friday.......but wait...

Wednesday - SELL! Big down day. DOW down 115 pts and Nasdaq down 20 pts.

Thursday - HUGE up day! Biggest up day since the year 2003. DOW up 206 pts and Nasdaq up 48 pts!

What is going on? Are you feeling dizzy yet? Pessimism was rampant in March with fears of inflation, rising Fed rates, decreasing corporate profits. Negativity everywhere. IBM's poor earnings and apples estimates miss last week were oil on fire.

This week, Intel had great earnings. Followed by Yahoo, EMC and Google. These companies beat estimates and raised guidance. Hey, maybe the economy ain't so bad after all?

I'm excited to see what tomorrow brings.

2005-04-19T15:47:00.000-07:00

How quickly things change in the stock market. Just last Friday the markets tanked with the DOW dropping 191 points. Voices screaming 'sell! sell!' and 'economy is falling of the cliff' could be heard from the myriad of market bears. This week, a ray of warm sun light has landed on the markets and they are looking good so far with solid earnings coming out of Texas Instruments and Intel. If you sold on Friday then you really need more patience. Patience is gold for anyone wishing to win in this market. In fact, you need nerves of steel.

I have come to the conclusion that with the introduction of online trading and ever improving trading technologies available, trading has become easier, faster and more accessible. As a result, markets have become more volatile with wilder gyrations. The volatility comes faster and goes away faster than ever before. Markets can now have huge swings from overvalue to undervalue in the matter of days. The folks at CNBC giving daily commentaries can barely catch up!

This week is shaping up to be a good week for the technologies. The semiconductors in particular should have a nice bounce tomorrow. If you hold these stocks then I caution that you sell into strength this week because the outlook for the sector is still weak for the rest of the year.

Anticipating a tough day

2005-04-15T00:35:00.000-07:00

After IBM's disappointing earnings announcement, everyone is expecting a tough tough day tomorrow in the markets.

After market open in Europe this morning, a commentator on CNBC World, looking at the down market numbers across Europe said to viewers - 'If you are long in the market, go take a break, lie down and take an aspirin'.

Golden words of wisdom.

Bitter Sweet Apple Earnings

2005-04-14T14:56:00.000-07:00

What a tough market. Apple reported earnings after market close yesterday beating estimates and showing sequential growth and higher revenues. But Apple stocks fall and are now trading at $37 falling from $41 before earnings release.

Sometimes, markets are all about expectations and reality and where the two meet. When a stock has low expectations but releases good numbers in reality, it rises. In the case of Apple, expectations have ballooned so big that even a great reality is not great enough. So the stock sells off.

I believe the core of the issue is that although ipod sales have gone up 16%, profit margins have fallen 16%. This means that although they are selling more, they are having to reduce prices to do so. In addition, the halo effect of ipod owners buying MACs have not yet materialized with MAC sales increasing only 2%.

Sit tight, this apple ride is very bumpy.

Investing in Apple Computers

2005-04-11T23:19:00.000-07:00

Jim Cramer from CNBC's Mad Money thinks that Apple Computers earning report will be good this week. He also thinks they will give good guidance.

Apple has doubled over the last 6 months riding on the tremendous success of the IPOD. IPOD and accessories sales are now half of Apple's total sales!

Most understand that the IPOD will not and can not rule forever. Competition from Creative Labs and other manufacturers are heating up and prices are sure to fall. It is however the halo effect of the IPOD that will bring fortunes to Apple. Many believe that a high percentage of IPOD owners are likely to switch to the MAC from the PC. This will drive Apples future growth.
I personally won't be switching to MACs anytime soon, but I can understand why many would. MACs are good looking and trouble free - a great combo for most users.

For these reasons, I believe Apple would be a good trade at least for the short term to take it a few points higher.

Investments: Buy Energy Sell real estate

2005-04-07T11:57:00.000-07:00

Winds of change are constantly blowing on our economy into different directions. What direction the economy ends up taking is difficult to see day to day. But slowly the trend becomes visible akin the pattern of the sands on the beach.

Some indisputable truths are visible: Energy prices are increasing, interest rates are increasing, inflation is increasing, real estate has been on a tear upwards for the last 3 years.

Before I continue further, let me remind you that all markets go in cycles. Nothing goes up forever and nothing goes down forever. Bubbles form when crowds become irrational and chase for profits. Bust cycles follow with people who chased the tail end getting burned the most.

Energy prices are going to go up for the long term. Oil in the $20-30 dollar range will never be seen again in our lifetimes because exploration costs and refining costs alone are above $25 a barrel. Add the increasing global demand from emerging markets (China, India etc) and you can see why both supply (decreasing) and demand (increasing) is going to push prices to knew highs.

In the short-term, oil may retreat. That I anticipate. Oil related stocks and investments have gone up quickly recently and a correction should be around the corner. Nothing ever goes straight up. But in the long term, buy energy.

Interest rates are increasing and it has to stomp inflation. There has been a lot of speculation on housing with people flipping condos and houses like stocks. This has largely been fueled by the low interest rates. But as the rates increase, demand will slow. The overblown bubble will burst. People stretched on their mortgages with a tiny down payment and floating rates will get hurt the most. Its unfortunate that such events happen but history shows it always happen when people flock to a place where there seems to be endless flows of easy money. If you own several homes hoping to flip them, I advise you sell them while the market is still good because by the time the masses see the bubble bursting, they will be flooding to the emergency exits and those slow to move will get tramped on amidst the frenzy.

Recession?

Yes, the horrible R word. I don't know for sure if we will be entering a period of recession in the near future but there is a possibility. Higher oil prices affect everything that we do beyond just at the gas pump. Food gets more expensive to produce, transportation of goods get more expensive, utility bills increase, holidays get more expensive - EVERYTHING becomes more expensive. What's the immediate result? People spend less. The economy slows.

Spending slows, people hold back in buying that new condo, they go to the mall less and they go to restaurants less. The weekly high prices they pay at the pump decreases their appetite to spend.

The cost of businesses due to higher energy prices also increases. Combined with slowing spending, companies may close shop or would need to cut cost and unfortunately workers lose their jobs. This viscous cycle continues.

Could all this trigger a global recession? Possible. Slowing spending in the west would hurt many economies around the world including China and India whom sells most of their goods here. The world's economies are intricately bonded to each other.

The end result is be very careful and diligent with your investments. We are entering a difficult period.

Jim Rogers' daughter learns Chinese

2005-03-25T14:10:00.000-08:00

I'm a fan of Jim Rogers as you probably know by now so I certainly cannot miss sharing with you a Business Week article that I've found. A little old from 2004 but interesting nonetheless. If you are interested in Jim Rogers and his investment ideas, be sure to check this out.

Jim Rogers' Home Truths

Oil investments

2005-03-23T01:16:00.000-08:00

By now you should have heard and seen the rising oil prices. As I write this, oil is at $56 a barrel. Some believe that oil is clearly overpriced while others feel it will go even higher.

No doubt high oil prices have a negative effect on the economy. Businesses cost more to run, people spend more money on gas and less in consumer products and overall sales and profits fall.

Oil bears argue that oil have risen too much based on speculation. Oil Bulls argue that although oil prices are high, it is still low historically on an inflation adjusted basis.

I am on the oil bull camp. Oil may have a short to medium term adjustment back to about $45 a barrel but it will never reach the $30 again. The reasons are many but for one, most of the 'easy to acquire' oil from the existing oil wells have been drained. The cost to acquire the remaining oil has risen to $22-$25 per barrel and new oil exploration has also diminished. Add the fact that China and India are fast becoming huge oil importers, buying up all excess capacity that used to act as a price cushion for increased demand in the west . The thirst for oil in China and India is expected to continue to increase for the foreseeable future.

As investors, where can we direct our investments? My advise is to invest selectively in oil stocks. An oil ETF (Exchange traded fund) I recommend is XLE with a very low expense ratio (0.27). XLE has large holdings in many oil stocks such as Exxon Mobil and Chevron Texaco. It has risen over 20% already in 2005. It is trading above $43 and I would start to accumulate below $38 on a pull back.

An adjustment in oil price is normal and expected by about June when the US government will make available some of the 700 million barrels of reserves to help curb prices. They however cannot fight the underlying fundamentals for long and the trend in higher oil prices will continue to increase in the long run.

I will share with you about other oil investment possibilities in my next blog entry.

Good luck investing!

Surprise--Gates is still world's richest person | CNET News.com

2005-03-11T01:04:00.000-08:00

Want to see who the billionaires are according to the latest data from Forbes? Maybe our investments will take us there some day....;)

Surprise--Gates is still world's richest person | CNET News.com

Rejection, argument, anger and finally acceptance

2005-03-08T02:05:00.000-08:00

I'd like to share an excerpt with you today:

".....I am reminded of the various stages of grief: rejection, argument, anger, and acceptance. It is true of terminal disease and the progress of great ideas as well. When somebody first comes up with a new idea, everybody ignores it. Then people ridicule it, coming up with vehement arguments against it, before arriving at acceptance and support. Then not only do they find themselves explaining why it is a good idea; they go on to say, 'Yeah, I thought of it.' It has been proved to be true though out history and is true of politics, economics and warfare. General Billy Mitchell was drummed out of the service in the 1920s for claiming the aircraft carrier was the wave of the future. Nobody remembers that now, of course, certainly not the people in the armed forces".

-Jim Rogers, in 'Adventure Capitalist'

Why is it that new and great ideas are always met with ridicule and rejection? History is laden with great men whom introduced radical new ideas, only to be shamed and accused of heresy.

Galileo, in the early 16th century, proved through his scientific research that the Sun did not revolve around the earth. Instead, he proposed that the Sun is in the centre while the Earth rotates on itself and moves around it. We all know this today as common sense but Galileo was found guilty for proposing such heresy and condemned to lifelong imprisonment.

When people hear a new idea that doesn't affect them, they greet it with indifference. However, if it does affect them, they greet it with rejection and argument because it changes their world. It is unfamiliar and it makes them uncomfortable. It creates a feeling of insecurity.

These emotions are followed by anger. An emotional reaction against the person whose idea has threatened to disrupt their world (as in the case of Galileo condemned guilty).

Finally, after the evidence is undeniable, the once radical idea is accepted as fact. In some cases, the same people who most violently rejected the idea now claim the idea to be theirs. It is too bad that this type of human behavior keeps repeating itself. Would we ever change? I often have to fight my natural tendencies to reject new ideas and instead to keep an open mind. How open minded are you?

'Buy quality, and cry once'

2005-03-02T21:05:00.000-08:00

I'm in the process of buying a new laptop PC. It is not an easy task to make a choice amongst the myriad of models available. Choosing between different configurations, CPU speeds, memory sizes, LCD sizes, LCD resolutions, wide screen, weight, style, dimensions and robustness. I shall not continue down the list.

I have narrowed down my choices to an IBM Thinkpad. I have always been impressed by the Thinkpads. Ever since I worked for an authorized distributor of IBM, Compaq and HP computers in my first summer job. My responsibilities included installation and occasionally fixing problems. That was not an easy job...but I digress.

For my laptop, I've decided that a 14" display is optimal. Together with a Pentium Centrino M 1.7G CPU, 512M RAM and at least 40GB of Hard disk space. The IBM T42 has this configuration and all in a compact 1" thick sub 5 pounds package. I'm also going to settle for a regular XGA 14" LCD. The higher resolution SXGA+ 14" LCD would be luxurious but I shall not indulge at this time.

Even without the SXGA+ display, the laptop still tops $1500 USD. Ouch. Certainly more expensive than comparable models from competitors. That's the price to pay for the quality of an IBM.

I read a great quote from a user at an IBM Thinkpad forum. A Thinkpad owner, he justified his purchase with a quote that his father taught him when he was young:

"Buy quality, and cry once'

I love this quote.

Slowdown in Internet Advertising?

2005-02-28T23:59:00.000-08:00

Shares of Yahoo and Google were downgraded on the 24th February by an analyst of Caris & Co. citing a slowdown in paid advertising. Yahoo, Google and Valueclick (vlk) were all hit hard.

What is paid advertising? It is a form of online advertising where Ads appear on search result pages returned by a search engine and the advertisers pay based on the number of clicks. For example, when you search for the term 'Ipod' with Google, it would return a list of websites containing various information on the Ipod. However, on the right side of the page are a list of paid advertising. When you click on the links on those links, the advertisers pay Google. Advertisers buy keywords from Google to have their Ads appear.

Some say paid advertising had reached a bubble top in late 2004 with companies such as Ebay and Amazon buying large numbers of keywords. I suspect that the slowdown in paid advertising is only temporary. Paid advertising is one of the most effective forms of online advertising currently available because it is essentially a pay-as-you-see-results system. Advertisers can theoretically pay nothing if the search engine do not bring potential customers to their doors. Online advertising is going to continue its growth after this short slowdown. This creates a great opportunity to pick up some shares of Yahoo and Google while they are beaten down.

Happy investing!

I'll leave you with a good book I've read with an excellent chapter on Yahoo and their advertising businesses:
&lt;br&gt;

Go Daddy

2005-02-20T23:53:00.000-08:00

Did you watch the Super Bowl this year? How about the commercials? It's funny how so many people tune in to the Super Bowl just to watch the commercials. It's big business at 2.4 million for a 30 second clip.

Most of the commercials I've noticed are either beer or automobiles. But one commercial caught many people's attention this year. I'm talking about the raunchy GoDaddy.com commercial that poked fun of Janet Jackson's wardrobe mishap from the previous year.

This was reminiscent of the dotcom days of the late 90's. Could these crazy online companies be at it again spending big money and making no revenue? Hardly I believe.

GoDaddy is just one of many web hosting companies that registers your desired domain name (if available) and offers hosting services for a monthly subscription fee.

There are thousands and thousands of companies offering such services and the competition to gain customers is becoming fierce. Afterall, its an attractive business model with customers paying an on-going fee and relatively low running costs. Customer turnover is low because once a customer has parked his/her website to a hosting company, they feel it is troublesome to change. The competition is fierce to win over customers while it is still cheap to do so.

An analogy sometimes used is trench warfare. In trench warfare (most common in World War 1), armies on both sides would dig deep trenches to position their troops and try to move forward and gain ground towards each other in the midst of heavy gun fire and artillery. Once the trenches are dug and the positions are established, it becomes exponentially harder to gain ground. In a similar fashion, web hosting companies are seeing the growing competition and is trying to establish the best position now.

Beside GoDaddy there are many other strong web hosting companies that are fighting it out as this industry consolidates. Among them are Yahoo Domains, 1and1 and Network Solutions. Have you noticed Yahoo's strategic placement of Yahoo Domain Ads on their front page? This is a sure sign of how seriously Yahoo views this portion of their business.

A New Asian Crisis: A shortage of Girls

2005-02-19T22:31:00.000-08:00

I just read an interesting and amusing chapter from Jim Rogers' book Adventure Capitalist regarding a new crisis developing in Asia. In particular, China and South Korea. Here are excerpts from the chapter:

"Thoughout history, Mother Nature has skewed birth figures in favor of boys, roughly 51 to 49 percent"

"Today, throughout the world, for the first time in history, people, for cultural and economic reasons, are purposely having fewer children. It costs a lot of money to have children, and the time and energy children require put a serious strain on the modern married couple's freedom. Many nations, for different reasons -e.g., socially engineering themselves out of a population crisis- are actively working toward lowering their birthrates. In China until recently, it was official policy."

"In Korea, couples are having fewer children for personal rather than social reasons - they are doing so voluntarily rather than under pressure from the government- but the results are no different from those in China, where the ratio for current births is 117 boys to every 100 girls"

"You have a child, it's a boy, you stop. Even if those with a boy try again, half the second children are boys. That alone skews the population. You have a girl, you try again: if the second child is a boy, you stop. If the second child is a girl? Numerous girls are given up for adoption. But many couples, using sonogram technology, especially when it comes to a second child, simply abort the females."

"Where is all this leading? One thousand years ago, at the turn of the last millennium, for a variety of reasons - principally because girls were seen as a drag on the economy - the same situation arose in Europe. There were more men than women in the population. And girls suddenly became very valuable.....I believe that today's twelve-year-old Korean girl, in a decade or so, is going to realize she can have almost anything she wants."

Through his unconventional observation. Jim Rogers decided to invest in companies that manufactured birth control pills because equivalent companies in the US skyrocketed after women began using the pill.

What happens in a society when women have a lot of power and choice? One is many will choose to marry later and delay having children. With many in the workforce with an income and no commitments, they will choose to experience things that their mothers did not- pamper themselves, travel and spend money on designer clothing and accessories.

Spas, women's designer labels and beauty products are some areas that are poised to benefit from these trends. As an investor, these are areas that I have begun to pay more attention to.

&amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;lt;br&amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;gt;

Where are the jobs?

2005-02-17T15:05:00.000-08:00

One of my favorite analysts Charles Payne from Wall Street Strategies had a quote today:

"On the topic of interest rates, we could be getting set up for another round of Fed speculation when the next jobs report is released. This morning, the initial jobless claims report indicated that only 302,000 folks filed for unemployment benefits last week. This number is extremely low, and coupled with the trend over the last six weeks, one has to believe we are going to see a huge jobs report real soon. By the way, I don't buy this notion that so many people are out of the jobs market, and they simply aren't looking for jobs according to the pundits. Instead, I think people are working in so many non-traditional ways that it isn't being captured on traditional radars."

I believe Charles hit the nail in the head with this one. Many people in America today are finding work in non-traditional ways and the old metrics and systems that the government uses do not capture them. For starters, many people now work from home running their own businesses. These people earn their living and do not claim unemployment benefits. One example are the numerous number of people running successful online stores through eBay.

There is no doubt in my mind that this trend will continue as the traditional paradigm of working for large corporations (usually for life) shifts to a more individualistic paradigm. This trend is further accelerated by the mass layoffs we have witnessed in many industries.

How can we benefit from this trend from an investment point of view? I believe online advertising will continue to grow at phenomenal rates. The publicly traded companies standing to benefit the most at this moment are Google, Yahoo and eBay. Their advertising revenues are increasing every quarter.

Have you noticed that Google's revenues have almost caught up to Yahoos at over 3 billion! Given that Yahoo is still increasing revenues, this illustrates exactly the trend that I'm talking about.

Building the life you want to live

2005-02-16T01:54:00.000-08:00

Have you ever stopped to think about what kind of life you wish to live? Are you so busy that you haven't had quiet time to evaluate your life today and where it will be headed if it stayed on the current course?

These questions are multi dimensional but I'd like to approach them today from the perspective of a career.

How many hours do you want to spend at work daily?

How much money do you want to make? How much do you think will make you happy?

How important is your work/life balance?

After working as an employee for many years. I've come to understand myself more. I'm the type that is most motivated when I'm working for myself. Putting in the work to built up my own assets.

Working for yourself, you lose the comforts and security of a paycheck. But you get time in exchange. You can go travel for longer periods of time. You can work at night if you find yourself more productive then. You can go exercise or play tennis during the day. Manage your investments better (wink wink).

Having said that, we are only as free as our options. If you don't have significant savings and stable investments yet, you may not be in the position to become self employed....today. But if you can envision the life that you wish to live and you'd like to take control, it's never too late to start planning and saving. Freedom will always come at a price and in this case, it may be uncomfortable in the short term.

The question I'd like to leave you is this:
If your preference is to have a secure job. How secure is it really?

Nokia on the come back?

2005-02-14T01:05:00.000-08:00

Have you paid any attention recently to Nokia? Once the King of cell phones, they have fallen from grace in the eyes of many for losing the flip phone battle to the Korean manufacturers such as Samsung and LG.

I believe it was in January 2004 when Nokia announced in a press release that they were forecasting continued growth. Their share price in New York spiked into the $20 range. At the time, I was noticing around me the growing number of Korean flip phones offered in the market and how all the hip teenagers carried a Samsung with fancy face plates and bright flashing LEDs. I could not recall any new Nokia phones coming out or any friends owning a new Nokia phone. I could not understand how Nokia was backing their claims.

I thought, Nokia must be doing well in Europe. After all, Europeans tend to be protective of their brands and support them patriotically. Plus, I've made some good money on Nokia before so I should not doubt them. With that rationale, I loaded up on some shares at around $19 a share.

April 2004 came around quickly and Nokia suddenly issued an earnings warning and that they were losing market share! The stock was hit hard. What a scam I thought! How could they suddenly warn after making a growth forecast just 3 months earlier. I took the loss and learned a valuable lesson for myself- which was to notice the trends around me and invest accordingly. Nothing could be more accurate sometimes.

My point of this post was not just to tell you about what happened last year, but also to share some of my thoughts about Nokia and why it may be a good buy at this point.

Nokia is a recognized and trusted brand name. They may have missed out on the flip phone war in the last two years but it's not rocket science to make them. They can catch back up easily with a few new offerings. They already have many new phones in the pipeline.
They are a solid company with solid earnings and low price to earnings ratio and low price to book ratio
They are determined to be great again after being slapped in the face by their complacency when at the top of the mountain

Nokia has bounced back from a low of $10.89 to the current $15.97 and I've made back some of my losses. I think there is still more upside for this stock.

Stay tuned for some of my thoughts on the other giant named Motorola, the inventor of the original Star Tac flip phone.

Jim Rogers - Adventure Capitalist

2005-02-13T17:26:00.000-08:00

I'm currently reading Jim Rogers' book entitled "Adventure Capitalist". Jim Rogers is a very successful investor who retired at 37 after making a fortune in the stock market. He believes that life is more than just money and he wanted to experience life as much as possible having earned the option to do so with his fortunes.

He and his fiance Paige took a 3 year trip to travel across the world in a modified Mercedes SLK / G-Wagon. See www.jimrogers.com. It's unreal! This guy drove this bright bumble bee yellow sports convertible with big wheels around the world! How could he not get robbed and killed just from the attention alone!

Did I mention that Paige is a beautiful young lady who is the daughter of one of Jim's clients? He asked Paige to travel around the world with him on their first date. Good stuff.

Jim is an insightful investor and one of his goals while traveling was to find good investment opportunities. He can see a place for what it is from the ground up.

I'll be certain to share with you the most interesting stories from this facinating book. Stay tuned.

"Hello World"

2005-02-13T01:40:00.000-08:00

Hello World! Welcome to my new blog on anything to do with investing! On this blog, I will share with you my thoughts and experiences, things that I read, news items that are of interest and even specific stocks that I trade.

As of today, I have been working in the high tech industry for 7 years and been investing in the stock market for most of those years. A lot of what I write here would naturally have to do with technology. What are the future trends in technology? Where can we invest to benefit from those trends? To these questions and lots more I hope to give my 2 cents. This will be lots of fun.

I hope you will enjoy my blog and come back often. Feel free to add your comments and thoughts too!