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| Tuesday, November 13, 2007 |
| Liquidity Concerns |
No one expected this recent drawdown, and thus I thought my 2nd level of buying are spot on. But then I was wrong. I didn't expect it to go so much lower. And now I'm facing liquidity issues. Some are still sitting on long term up trends even though they are facing slowdowns/retracement. Ideally I would like to buy at the support level of the long term trend but I'm facing a shortage of cash for it. In the end, I had no choice but to offload my shares.
LyxorChinaH:
This is one of my only counters which tap on markets outside Singapore. Strategically, it is a good positioning as it targets on the China shares in Hong Kong. Furthermore, HangSeng is much more resilient than in Singapore as their market recovers much faster. Another thing to note is that Singapore likes to mirror Hang Seng’s movement. All this reasons makes it a strategically sound position to hold. However, like most counters across the board, it is currently undergoing a price correction. It is actually more severe than most as many deemed the valuations of H-Shares to be too high and charts do not lie as it does shows weakness in the trend. Unlike movement of other counters, this counter’s volume doesn’t decrease together with the price which underlines a bearish tone in this counter. Having bought at US$16.90 on 23rd August, I have sold at US$21.50. My cut loss is at $22, but I didn’t want to let go as I was having a mini Identity Crisis (read previous postings). Anyway, after taking into account conversion rates, transaction costs and whatnots, I have managed a 20.92% return, which is not bad. I will reconsider re-entering if it goes to $19. But I have to consider the US rates as I do not want my holdings to be excessively eroded by the decreasing rates. A price of $18++ would be wishful thinking, but I would 100% enter this position if it goes below $19 anytime soon. Gold: I have no idea if this was a wrong investment. My brother told me it’s quite silly to diversify like this and maybe it is true. However, I wanted this to be a long term counter. It is supposed to be kept for like years. But its US denomination made the counter less attractive. I bought on 19th September at US$71.60 and sold at US$80.90. After deduction of all costs, I managed a 5.79% return, which is ok, considering the time vested. I will take a look at it again in the future when I have more cash in hand, maybe placing my opportunity funds in indexes and gold funds would be a good idea, although I have to analyze it more carefully again next time. STI-ETF: Another long term stock being offloaded because of my poor management in averaging my other counters. Bought at a price of $33.80, I sold recently at a price of $36.08. A return of about 4.993% kind shows how desperate I am in offloading a long term counter. Nothing much to say about this, only that it has been time proven that indexes in the long run has more than 8% annual returns compounded. ChinaAOil: I used part of the cash to top up the supposed 3rd tier of CAO at $2.31. As stated in various postings, CAO shows huge buy up volumes and low sell volumes. I have no idea who are the major players of the counters and why the lack of analyst coverage for this counter. This brings my average to $2.62, which is at the support level for the weekly charts. Conclusion: The global economy is seeing some consolidation and it is coming to an end soon. The direction that it sets following the consolidation will determine if it’s the last leg of the bull or first leg of the bear. Nonetheless, most of the problems stem from the States. While China is having issues like inflation as well, coupled with soaring food prices, it seems likely that regulations will be placed to curb inflation. This is also the reason why SSE is showing a correction as well. Most of my counters have affiliation with China, (FerroChina, ChinaAviationOil, AsiaEnv, PacAndes) and though it is a risk by itself for focusing too much on China, it can be seen that the global trend points to Asia in general. As for asset management, I now have some free float cash and I am not eager to plunge right into it. I have learnt that while that gives you good returns in the short run, in the event of a correction, it might just harm you. My main objective now is to accumulate free cash first (which I might invest in index, gold etc etc). Next, while accumulating, I will look for opportunities to: 1) Top up 2nd tiers for Tat Hong (Around $2.45 would be excellent) 2) Top up 3rd tier for PacAndes (Note that at the moment, prices are fluctuating wildly around the long term support level and it could go either way. This explains why I am unwilling to top up the 3rd tier now). 3) Top up 3rd tier for FerroChina ($2.19 would be a good price too) For 3rd tiers, I should NEVER be too hasty to go in because what goes down will go down further. There’s no need to be too fussy about picking the bottom as it is too difficult. Instead, the more important concept is to ensure that it has already reversed. Meanwhile, I will keep a lookout for counters which shows macro uptrend. Labels: Gld10US$, LyxorChinaH, NenixDreams Fund, STI ETF100 |
posted by Nenix @ 10:09 PM   |
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| Monday, November 12, 2007 |
| After Action Review |
The one mistake I think I made is the fact that my 2nd and 3rd tier additions are bought too early. While these two tiers ideally load up on the support levels, the price I loaded wasn’t exactly optimum. Firstly, my 2nd tier is way to close to the initial loading position. This makes cost averaging quite crappy in my opinion. Since I am loading a counter based on the long term trends, the 2nd tier should rightfully be used to load on the price slightly above the long term support level (this happens in corrections) while the 3rd tier is to be loaded at levels way below the base support level. This will fully stretch my time horizon of my holdings, which might be a good thing. Secondly, the idea of holding free cash float is easier said than done. This is because it is difficult to identify when the opportune time to buy is. I have used up my cash float on buying my 2nd tier counters during the time when I thought the correction would be mild. This sell down taught me few valuable lessons. I shall list them even before the correction ended. The list will consist of those that I learnt in the August Correction as well. Mistake 1: Itchy Fingers The random buying I did during the crash resulted in a more painful cut loss. The counters I loaded were done on impulse as I thought it was the bottom of the correction. I made this mistake again with OKP currently but generally, at the moment, all my positions held have been carried out with thought. Mistake 2: Free Float Cash Management Free float cash is important at times like this. What I failed to do is to load the counters too early on (this is not an unforced error as it is due to my rules which are not analyzed clearly). At the moment, to free my cash float, I have unloaded STI ETF, Gold, and Lyxor China H. I really hate to do that, but I don’t have much choice. As a result, this leaves my portfolio heavily unbalanced as my “Tier 1” is too weighted. The adjustment is due to the funds available to act as Tier 2, even though they might not been sufficient. Mistake 3: Wearing too big a hat for my head It suddenly comes to a point that I began to predict price movement. What started off as casual predictions soon ends up with me holding those beliefs. As a mechanical trader, this is just wrong. If I think back the primary reason for being a mechanical trader, it is because I suck at analyzing the market and valuating of stocks. I know that this is something that I might only be above average at best but not exceptional. Which is why I decide to go the path of actuarial science, which is by no means easier but given the upward bias of stocks in the long run, it gives me avenue to hone this skill. Anyway, last week, several of my counters have hit the cut loss trigger, but due to my belief in the market, I decided to act against it. This is wrong, as I should have kept faith in my rules instead. But now at the moment, it has been so oversold that it does not make sense to sell now. Thus, it will be a lesson learnt if I am bailed out in the long run. But my faith in the economy (which is crap), has incurred in lots of losses. These losses are not only the losses incurred by the sale of counters but it also includes the loss of grabbing the opportunities of rebounding counters. Mistake 4: Identity Crisis? I would not have classified this as a mistake but felt that I had to blog it down so that I can remember. Past weeks, I have been discussing about the merging of funds. It is at this point, that I feel that incorporating fundamentals to my fully technical and mechanical trading to be a good idea. However, it turns out that it has resulted in an identity crisis. Suddenly, I do not know whether to hold or to sell as both schools follow totally different approaches. Thus like a fool, I’m stuck in the middle of nowhere. I will sort this out after my tests this month. Labels: NenixDreams Fund |
| posted by Nenix @ 2:23 PM |
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| Wednesday, November 07, 2007 |
| Discipline in following the rules of the system |
The story is taken from Bloomberg and I highlighted the important points in red. Nov. 7 (Bloomberg) -- The dollar slumped to a record low against the euro after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign-exchange reserves in response to a falling U.S. currency.
``We will favor stronger currencies over weaker ones, and will readjust accordingly,'' Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, said at the same meeting.
The dollar fell against all 16 of the most-active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar.
``We're likely to see further pressure on the dollar,'' said Thomas Harr, senior foreign exchange strategist in Singapore at Standard Chartered Plc, a U.K. bank that makes most of its profit in Asia. ``The potential for diversification is quite big.''
The U.S. currency slumped to $1.4666 per euro, the lowest since the 13-nation currency debuted in January 1999, before trading at $1.4656 as of 9:05 a.m. in London, from $1.4557 late yesterday. The dollar traded as low as 113.69 yen, the lowest since Oct. 22. The euro was little changed at 166.80 yen.
The dollar fell to an all-time low against the synthetic euro, a theoretical value that estimates where the currency would have traded before its inception. The prior record was $1.4557 set in 1992.
The U.S. currency may fall to $1.50 against the euro, Harr said.
China's Reserves
Chinese investors have reduced their holdings of U.S. Treasuries by 5 percent to $400 billion in the five months to August. China Investment Corp., which manages the nation's $200 billion sovereign wealth fund, said last month it may get more of the nation's reserves to invest to improve returns.
U.S. 10-year Treasury notes rose today on speculation a two- day increase in yields will lure investors to buy them at a $13 billion sale of the securities today.
``The world's currency structure has changed; the dollar is losing its status as the world currency,'' Xu from the People's Bank of China said at the conference. Cheng, speaking to reporters after his speech, said his comments don't mean China will buy more euros.
``Cheng has a history of speaking out on a range of financial market and economic developments, and his comments are not always accurate,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.
Cheng's remarks on Jan. 30 that China's stock rally was a ``bubble'' caused the benchmark index to fall the most in almost two years on Jan. 31. The Shanghai and Shenzhen 300 Index, then over 2,500 points, has since climbed above 5,300.
ECB
Gains in the euro may be limited by speculation European economic growth may slow, reducing the need for higher interest rates.
The European Central Bank will keep its key rate at 4 percent tomorrow, according to all 61 economists surveyed by Bloomberg News. Data yesterday showed manufacturing orders in Germany fell more than expected in September.
``There is a European industrial complex which is now suffering from the euro being at such super expensive levels,'' said Peter Pontikis, treasury strategist at Suncorp-Metway Ltd. in Melbourne. ``The data all suggest you'll get a real slowdown. I'd be against the possibility of a rate hike.''
Europe's single currency will trade at $1.43 versus the dollar by year-end, according to the median forecast of 42 analysts and brokerages surveyed by Bloomberg News.
Commodities Prices
The dollar's decline helped drive the price of crude oil to a record $98 a barrel and gold to a 27-year high, encouraging investors to buy assets in commodity-producing nations.
Commodity currencies led the gains in currencies today. The pound rose to $2.0955, the highest since May 1981. The Canadian dollar advanced to $1.1010. The Australian dollar gained to 93.89 U.S. cents, the highest since April 1984, from 92.87 U.S. cents. The rand rose to 6.4490 per dollar, the highest since May 2006.
The dollar's 9.8 percent drop against the euro this year boosted the competitiveness of U.S. exports, helping shrink the nation's trade deficit to $57.6 billion in August, the smallest since January.
French President Nicolas Sarkozy yesterday brought his concerns to the U.S., saying ``you don't need too weak a dollar'' to spur growth in the world's largest economy.
``This is an asset story and shows sentiment for the dollar continues to be quite negative,'' said David Forrester, currency economist at Barclays Capital in Singapore.
The Australian dollar gained after the country's central bank raised its benchmark borrowing cost to 6.75 percent today. Governor Glenn Stevens, announcing today's quarter-point rate increase, said inflation will exceed his target.
Dollar Depreciation
The dollar fell against the Norwegian krone as traders added to bets Norway's central bank will increase its 5 percent deposit rate. It declined to 5.3011 kroner, from 5.3474. The dollar also fell as losses from subprime-mortgage defaults added to pressure on the Federal Reserve to lower its target for the overnight lending rate between banks to 4.25 percent next month.
``The interest-rate outlook is dragging down the dollar against major currencies such as the euro and the Australian dollar,'' said Seiichiro Muta, director of foreign exchange in Tokyo at UBS AG, the world's second-largest currency trader. ``I cannot see the bottom of the dollar depreciation yet.''
Subprime Loans
Interest-rate futures traded on the Chicago Board of Trade show a 62 percent chance of a quarter-percentage point Fed rate cut on Dec. 11, compared with 6 percent a month ago. Citigroup Inc. may write down an additional $2.7 billion worth of subprime- related assets, CreditSights Inc. said yesterday.
New Zealand's dollar rose to 78.38 U.S. cents from 78 U.S. cents on speculation a report tomorrow will show the unemployment rate remained at a record low, boosting the chance of another increase to the country's record 8.25 percent benchmark interest rate.
``The dollar is weak against a host of currencies, including the euro, the pound and the Australian dollar,'' said Mitsuru Sahara, senior currency sales manager at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's biggest publicly traded lender. ``We can't tell how much money banks will lose on subprime loans. The Fed is likely to cut rates again before the end of the year.''
Last Updated: November 7, 2007 04:12 EST This important issue is that US now show significant reaction to China’s intention to diversify and this might potentially show the power shift from US to China. The intention of Chen SiWei to announce their plan is unknown as they would have known that such announcements will devalue the US dollar. Thus what we see now is a consolidation, especially in Singapore market, maybe because of the “kiasi-ness”, we are at the sidelines watching how events unfold first. And it could be seen as many have closed their positions today as they do not want to hold their positions overnight, which resulted in selling down of shares. While we thrive to be a world class market, the nature of our market is very sentiment driven. Most of us react to daily movements of Dow Jones, or Hang Seng, or European markets to guide our market direction. Even for me, I always tend to use daily movements of these markets as a guide. So now we know that we are still consolidating, what can we expect from our market? Firstly, it won’t be surprising if we see a long consolidation as many will have the “sell on strength” mentality. Secondly, STI will generally be directionless as they will be looking for someone to “follow”. Thirdly, China stocks will be pressed down for the time being. Personally, a few of my counters have hit the down trend. It’s most probably time to trim my trading positions, and of course my CFDs. It’s disappointing that I have to do that as I was actually quite bullish for the remaining of the year. But trends don’t lie, and while it seems directionless, the fact is that it turned downwards recently. In accordance to my system, I will have to cut some of them, and that means 2/3 of AsiaEnv, ½ of PacAndes, ½ of CAO, all of OKP(CFD) and all of AdvSCT(CFD). It’s a loss but at least it is true to my system. Labels: NenixDreams Fund |
| posted by Nenix @ 11:27 PM |
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| Friday, November 02, 2007 |
| 2nd Nov update |
This doesn't look as good as I thought. Currently, it is trading sideways, and this spells trouble for trend followers. As trend followers need affirmation, it usually takes some time for it to go up before I enter. Likewise for exiting. But current trend will make me buy and sell very frequently causing me lots of unnecessary costs.
Anyway, my current week is not good. Firstly, my counters are in the red. Secondly, which is the more important one, I have used up most of my funds. This don't spell good news as after another shock, I would have to cut my counters to get the stock I want.
Anyway, I am bullish for this year and maybe we would see lesser influence from the US on the current market (Not fundamental wise, but sentiment wise). I am now at $1.47, which is not ideal.
Next week will be a better week :)Labels: NenixDreams Fund |
| posted by Nenix @ 9:14 PM |
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| Friday, October 26, 2007 |
| 26th October 2007 update |
This is the last week of October and I have loaded my positions on Wed, which I believed is the low of the consolidation. Though I am wrong on this, I feel that my entry is well justified with indicators showing a highly probable event of rebounding.
I still have around 13% cash, of which it will be used for my third tier of counters or for shorter term tradings. Right now, I need more confirmation of recovery of some oil and gas counters, in particular, Tiongwoon, before loading it. For such counters, there will not be a different tiered system and loading should be one time only. Of cos, that should be put aside for the moment. This month really has been quite a wonderful month in terms of knowledge and experience gained. I learned to have a scenario analysis table to guide me so that I won't make impulse decisions. Right now, though I am disciplined in cutting losses, sometimes, I just cut without thinking. haha.. Fear sometimes get to my head when there is a sea of red. But with scenario analyisis, events will be played in my head so I know how to react etc. In terms of performance, it is actually quite bad as I failed miserably to catch up with STI benchmark. So I will be working on that soon. Maybe next week will be an interesting week. Maybe if rates were not cut, we would see another wave of red. That, in my opinion, would be interesting. Labels: NenixDreams Fund |
| posted by Nenix @ 9:31 PM |
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| Saturday, October 20, 2007 |
| A potential Merger! |
Seems like there might be a merger of funds! If you look at this blog http://melynn-lynch.blogspot.com, you will realize that he is an aspiring hardcore fundamental analyst. Even the blog link sounds fundamental. haha. For me on the other hand, while I have made quite a fair bit of mistakes, many in fact, my research is basely more on portfolio management, risk allocation, and some half past six technical analysis.
For my handling of my funds, I have realized that though TA tells you which direction it will go, it does not tell you how far it will go. This is especially true for a trend follower like me. However, with FA factored into the analysis, it will provide more depth on how far it can go.
At the point of typing, I am really excited by the prospect because this is something we have never done before. There will be lots of beneficial points from this merge.
A) More funds makes the approach easier as we could hold larger positions. We could now think of how to maintain the base of our holdings and take profits at the same time. It will be more cost efficient now as we have more power.
B) Two extreme schools of thought will be beneficial. Even though both of us are quite raw in our
trade, we believe that constant learning will improve our the odds of having a big runner.
However, lots of administrative work is needed at the moment
1) The standard operating procedure of analysis and asset allocation
2) Scenario analysis
3) How to approach disputes with peace.
My my my, this is so exciting. However, both of us have not gone through a crash/recession, so we do not know if we could really handle that. Furthermore, it is always likely that my TA or his FA will pull the fund down. Anyway, Asset Allocation is the main key to success and we feel that if this is ironed out, the probability will swing to our favor. Maybe if time allows, we will set a combined blog that tracks our holdings. Watch that space if that happens then!Labels: NenixDreams Fund |
| posted by Nenix @ 11:19 PM |
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| Friday, October 19, 2007 |
| 19th October update |
Before I begin, I have tweaked my beta version of my trading system. Some of the distinct changes
1. Each position will be allocated a larger portion of risk as compared to the previous version.
2. Screening process will be and much stringent. This includes The long term trend direction, short term trend direction, momentum of short term trend.
3. Decision to buy based on the price it is in and it is divided into several tiers.
Tier 1: trying to get into position.
Tier 2: trying to buy at short term weakness
Tier 3: trying to bottom fish
Tier 4: using CFD when it has rebounded from long term weakness short term down trend
4. Decision to cut loss is still the same. However, I'm still deciding if the Tier entry should follow the same cut loss degree.
5. Decision to profit take. While trend following still applies, due to larger positions, I could actually stagger profit taking. Tier 2 and Tier 3 could be used for profit taking as these funds are used to bottom fish in the market. From experience, a correction always comes when one gets too carried away with purchasing stocks. Thus, profit taking is important so as to keep more free cash in your portfolio.
6. Decision to exit. Similar to previous version of the trading system, the time to exit will be exhitbited by the EMA. True enough, the loss incurred due to some cost averaging is high, but the risk of not exiting is even higher. Furthermore, there might not be too much loss, as it is cost averaged at tier 3.
Generally, these are the principles for the system and at the moment, I am currently employing this system. I have loaded 3 core equities in pac Andes, FerroChina, AsiaEnv and ChinaAOil. These 4 counters are already loaded in Tier one, with AsiaEnv being loading with the second tier counters. I have still funds to load the 3rd tier of AsiaEnv, 2nd tier of CAO and FerroChina. However, I would also want to wait for opportunities to load on the counters that are battered hard at the moment. Loading a tier 3 for short term is a good idea though.
I will be blogging again soon if I could find the time. Recent activities have taken quite a hit on my portfolio, dropping back to $1.48. Will see it drop down to as low as $1.40.Labels: NenixDreams Fund |
| posted by Nenix @ 11:51 PM |
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| Wednesday, October 17, 2007 |
| Drawbacks of Technical Analysis |
While I pride upon myself for being a 100% pure technical trader with disregard to fundamentals, I do face a few problems during my trading experience. To begin talking about the drawbacks of TA, I would like to first critique on my own unpolished Trading System.
Critique on my system
Problem 1: One of the issues is the fact that I might enter and exit a counter too late. Although this was my intention as all I want is to capture the meat of the trend, but sometimes, when price shocks occur, it will hit my indicators, as a result, selling at a low. So right now, what I did was not against my system. However, if you look at how EMAs work, once the counter increases in value for some time, the EMAs will diverge so much that it will take a big drop to cut the EMA. That is the main problem in my opinion.
Potential Remedy:
When to buy: I will now purchase my counters in 3 batches. First is the recognition of the trend. Second will be when the price goes below the first support line. Third will be when the price reaches the third support line. One advantage is that I will have bargain buys in times of price shocks.
When to cutloss: This is a bit tricky as most of the time, it will coincide with the buying signal. In the recent past, I said that I shouldn't use cost averaging as it is "unfair" for the good positions but if I adopt this remedy, I will have use cost averaging. The cut loss should then be at the level if it is under the lowest EMA for x number of days.
When to profit take: This will be a new idea because once I accumulated enough, I should profit take on the excessive positions. To profit take maybe once it shows signs of consolidation. Profit taking could also be done on 3 stages, with the last stage signifying the closing of the position.
What to buy: The positions are larger, thus it is impossible to adopt my current strategy. Maybe a glance at fundamental data would be desired.
Verdict: The idea here is to capitalize on the trend till it actually breaks. Profit taking will reduce profits if it runs, but it will definitely allows one to stay in the trend longer as capital is present to cost average it. Furthermore, this might offset huge divergence of EMAs. The general idea is to sell 2/3 (assuming that accumulation is complete) once the shortest EMA is showing tiredness, buy 1/3 at the 2nd EMA line, and the last 1/3 at the 3rd EMA line or if the 1st line shows recovery. Yup, the system will be something like that.
In reality, I guess there will be situation whereby I will have 1/3 remaining after which I will top up another 1/3 at a higher price. This leaves the final third as free flowing cash flow. That is why the 1/3 will always be there till it actually breaks.
Drawback of TA
One of the main drawbacks is that while knowing technical analysis will set you up in the right direction, it doesn't really have much mechanisms that will determine the maximum upside of the counter. With this, it is kinda difficult to ride the trend as it will come to a point in time whereby you have lots of trends showing good signs. Like I mentioned, I am confident my system will have profits but my aim shouldn't be just profits, it should at least beat the local index. Right now, while I am able to keep downside at a minimum, I have no idea how to predict the upside.
Seems like I have no choice but to check out the fundamentals of the company. Luckily my brother will be able to help me out. It is interesting to note that while he is predominantly FA, I am predominantly TA. And at the moment, he has much better returns than I am, so I guess he must be doing the right things. I think if both of us learn faster and be good at what we are doing at the moment, then the million dollar dream will not be so far off!Labels: NenixDreams Fund |
| posted by Nenix @ 10:11 PM |
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| Tuesday, October 16, 2007 |
| Food for thought |
| Once upon a time, in a village a man appeared who announced to the villagers that he would buy monkeys for $10. The villagers seeing thatthere were many monkeys went out in the forest and started catching them.The man bought thousands at $10 and as supply started to diminish andvillagers started to stop their effort he announced that now he would buy at $20. This renewed the efforts of the villagers and they startedcatching moneys again. Soon the supply diminished even further and people started going back to their farms. The offer rate increased to $25 and the supply of monkeys became so that it was an effort to even see a monkey let alone catch it. The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business his assistant would now buy on behalf of the man. In the absence of the man, the assistant told the villagers "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man comes back, you can sell it to him for $50." The villager squeezed up with all their saving to buy the monkeys. Then they never saw the man nor his assistant, only monkeys everywhere! Labels: NenixDreams Fund |
| posted by Nenix @ 12:14 PM |
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| Monday, October 15, 2007 |
| Cut loss strategies for 14th October 2007 to18th October 2007 |
Risky Stocks
FuJianZY - EP: 0.715
MiddleEast - EP: 0.205
Gold - Exit price(EP): 64.4325 (Long term investment)
Moderate Risk Stocks
ChinaAOil - EP: 2.60 - "Zero Risk"
AsiaEnv - EP: 0.7
Swissco - EP: 1.21
TiongWoon - EP: 1.00 - "Zero Risk"
OKP - EP: 0.765 - "Zero Risk"
FerroChina - EP: 2.42 - "Zero Risk"
Rotary - EP: 1.30
Federal - EP: 0.730 - "Zero Risk"
Lyxor H China - EP: 22.71 - "Zero Risk"
Low Risk stocks
Wheelock - EP: 2.62
Soilbuild - EP: 1.30
FJBen - EP: 0.82
MMP - EP: 1.12 - Comments: Not selling as it is for the longer term
STI ETF - EP: 37.79 - "Zero Risk" - Comments: not Selling as it is for the longer term.
Boustead - EP: 2.31
AdvSCT - EP: 0.925
As I would like to say, this exit system is a dynamics one and it changes daily. So this table here just shows a guideline for the entire week. I will not be uploading updates for cut losses daily as more often than not, it wont fluctuate very wildly.Labels: NenixDreams Fund |
| posted by Nenix @ 12:32 AM |
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| Position Trading vs Swing Trading |
Position trading is more on trading on the position, which is practically what I'm doing now. There are many ways of position trading. Some examples are EMA and band trading. EMAs are basically trend trading as they show you the trend. Long when it is going up and short when it is going down. A simple theory and concept but not many can grasp it. Band trading works differently though. They trade basely on support and resistance and believe in counter trends. Basically, they trade on the rebounds.
Swing trading on the other hand is more focused on trading on the momentum. Usually, it is very short term. I feel this is more for cash generation. I'm not entirely sure how to do it effeciently but I will be reading up on it.
Just food for thought, I think I do need cash generation so that I would have more cash in hand. CFD perfectly fits the bill due to its nature of financial charges. I might be considering this, but one thing for sure is that I won't exit too frequently as I need to prepare my trading style such that it will not affect my fulltime job when I graduate from university.Labels: NenixDreams Fund |
| posted by Nenix @ 12:07 AM |
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| Friday, October 12, 2007 |
| 12th October update |
This week is rather mixed for me. Overall has dropped from $1.56 to $1.55. Market correction seems possible though, but anything more than that seems unlikely. If you ask me, on hindsight, I felt that I invested too early. I knew from technical indicators that a consolidation is possible for OKP, advSCT, asiaEnv, pacAndes. Thats why I sold advSCT, some asiaEnv, pacAndes. Basically, I cleared my CFDs. Then when market corrected down, I tried to bargain pick these counters. Initially, I queued OKP for 80cents, advSCT at 995, asiaenv at 0.775. But I was afraid that I couldn't get it, so I used cash to get advSCT and asiaEnv, thinking that since it is for the longer time horizon, it should be ok to get it soon. For OKP. i changed at the last minute to get at 825. Oh well, I feel there isn't much wrong in my decision though. This week has been shaky, having lots of whipsawed movements. How I read this is that stocks are exchanging hands, and it is more geared towards accumulation by funds. At the moment, after the correction, I think funds have lots of cash at hand and by default, they need to be in the market. Thus, they might be loading in positions now. Generally, things are looking sweet at the moment. A last note of caution, we are almost halfway through the historically bad month of October and the year end rally is near. If we follow historical trends, then I will have to say that my fund will not go below $1.50 till the correction next year! Anyway, the decision on whether to cut the fed rates in two weeks time will be the catalyst for either the year end rally, or stagnant growth till end year. Labels: NenixDreams Fund |
| posted by Nenix @ 9:34 PM |
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| Saturday, October 06, 2007 |
| 5th October Update |
This week was just ok for me. Didn't manage to beat the market as we are both level at 56% mark. But I know this is a long term game and I know that patience is important. Besides, the trends of most of my counters are kicking in and it's just a matter of time I see the rewards.
One significant change to my portfolio is the introduction of Wheelock. As you can see, it holds the largest percentage in my portfolio. There are a few reasons for this.
1) Wheelock is at the lower band of the moderate risk segment (3.17). This means that fluctuation is limited and thus indicates that taking on a larger position will be rather safe.
2) I am trying to trim the total number of stocks (excluding those in CFD) to about 10 to 15. This basically means that I will be taking more risk per position held. While I can save more on transaction fees, it also means that I might end up losing more. It's a balance that I found it very difficult to achieve, on whether to focus on cost cutting (transaction fees), risk incurred (potential losses for holdings) or profits (potential profits for holdings). Anyway, to reduce the number of positions, I could only start by adopting a larger position for subsequent stocks.
3) Property market are lagging at the moment possibly due to the focus on S-shares. People will start noticing it soon once the S-share craze has settled down. Wheelock recently exhibited uptrend and it still way below the price before the correction (The correction of property is way before the recent meltdown due to implementation of higher development charges) Below is the summary for the risks of my holdings and the cutloss price for Monday.
Risky Stocks
Gold - Exit price(EP): 60.55 - Comments: Not selling though as it is a long term holdings MiddleEast - EP: 0.205
Moderate Risk Stocks
AsiaEnv - EP: 0.675 ChinaAOil - EP: 2.50 FerroChina - EP: 2.38 - "Zero Risk" (This means that cut loss point is higher than purchase price, thus implying a guaranteed profit in adverse conditions) TiongWoon - EP: 1.03 - "Zero Risk" Swissco - EP: 1.23 PacAndes - EP: 0.755 CWT - EP: 1.11 - "Zero Risk" Rotary - EP: 1.30 OKP - EP: 0.775 - "Zero Risk" AdvSCT - EP: 0.925 - "Zero Risk" Federal - EP: 0.785 - "Zero Risk" Wheelock - EP: 2.55
Low Risk stocks
Soilbuild - EP: 1.30 Lyxor H China - EP: 20.96 - "Zero Risk" FJBen - EP: 0.84 - "Zero Risk" MMP - EP: 1.14 - Comments: Not selling as it is for the longer term Boustead - EP: 2.30 STI ETF - EP: 36.785 - "Zero Risk" - Comments: not Selling as it is for the longer term.
Please note that this EP is dynamic and it is changing everyday depending on the market conditions. This mechanism is to protect myself from drastic price shocks. However, if there are no price shocks, the only time whereby I will exit a position is when the trend bend. While this might not be as profitable as other strategies, it will at least ensure that I am earning profits.
Labels: NenixDreams Fund |
| posted by Nenix @ 2:27 AM |
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| Saturday, September 29, 2007 |
| 29th September update |
This week ended on a high note thanks to funds from China. Their recently structured funds state that they could invest in China stocks outside china which have more than 50% of its business outside China. This effectively meant stocks like FerroChina and ChinaAOil are the beneficiary. Today was a huge upgrade from my previous week. If you ask me if the trouble is over? My take is that, it doesnt seem so. American data are still weak. One thing that is certain is that China stocks will be surging next week. This is helped with the fact that China is having a 1 week holiday! Labels: NenixDreams Fund |
| posted by Nenix @ 1:20 AM |
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| Sunday, September 23, 2007 |
| Risk Ratings |
As you all know by now, my measure of risk is calculated based on volatility. The following is my order of risk of my portfolio from those with highest risk to those with the least risk.
The format will be as follows, counter - rating - segment.
There will be 4 segments. Extremely risky (rating more than 20), risky (bewtween 10 to 20), moderate (5 to 10), Low risk (below 5)
Nenix's portfolio
MiddleEastDevelopment - 24.285 - Extremely risky
AsiaEnv - 12.857 - Risky
OKP - 12.830 - Risky
TiongWoon - 12.476 - Risky
HiapSeng - 11.978 - Risky
FerroChina - 11.972 - Risky
CAO - 11.759 - Risky
Swissco - 11.28 - Risky
Federal - 10.909 - Risky
Rotary - 9.214 - Moderate
CWT - 8.487 - Moderate
PacAndes - 8.108 - Moderate
FJBen - 7.928 - Moderate
Boustead - 6.394 - Moderate
LyxorChina H US$- 4.995 - Low risk
MMP Reit - 4.833 - Low risk
STI ETF - 3.858 - Low risk
Gold 10US$ - 2.087 - Low risk
Coincidentally, my long term funds are those with the least risk (MMP, STI ETF, Gold), which makes sense. I think I could further reduce my risk if I hedge my US denominated shares like LyxorChina and Gold. However, I have no idea how to go about doing it. Maybe I'll apply FX first before thinking of the course of action.Labels: NenixDreams Fund |
| posted by Nenix @ 3:14 PM |
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| Saturday, September 22, 2007 |
| 21st September update |
 This week seems ok for me. After the fed cut, what surprised me is that most of the pennies did not move as expected. Maybe because the Singaporean culture is "kiasi", that's why most will wait and see. And then when it reaches unrealistic levels, they will be "kiasu" and chase the price.
Anyway, this month, I am quite pleased with what I have done. I have set acquired positions when the trend (both middle term and short term) just picks up. Ideally, this is the signal I would like. Although there are hiccups during this month, ChipengSeng and Yongnam in particular, I guess I am still decisive enough to cut my losses. Putting these stocks for a longer term basis, the cut loss triggers would naturally be lower and it is dangerous as it is possible that I might have the "hold-it-since-I-already-lost-so-much" mentality.
On the other hand, there are still critical issues that I did this month. The purchase of AsiaEnv using CFD is not a wise choice. Even though calculated, I should have known not use CFD as the trend is still not established. CAO also proves to be an issue even though it's still sitting nice in the longer term perspective.
Now my portfolio has been properly segmented. I have to count myself lucky to be able to have sufficient funds to do that.
My long term funds include:
STI ETF
MMP Reit
Gold 10US$
These 3 adds up to 18.72%, which is ideal from my point of view as I have an estimated target of 20% to 25%. The strategy to load up should be similar to how I invest in other equities. Make sure that the trend is present before loading up.
My other shares are mostly middle term and most of my counters are surprisingly from the Oil and Gas sector. I can assure you that this is purely coincidental as I purchased stocks through formation of trends. And they were the first to exhibit trends after the huge correction not so long ago.
Among all, CWT proves to be a surprise package. Strong momentum pushing it forward triggers my buying signal. Furthermore, it seems to be away from noise trading (contra traders, day traders etc). In fact, I'm quite glad most forums didn't talk about it. Hopefully it will continue to rise silently.
My thoughts on the economy:
This is my amateurish 2cents worth of the economy. I think there are at most 3 more distinct bull runs till recession hits US. Fed cuts doesn't seem to address the issues except instill more liquidity. This, in my opinion gives the market a chance to bail out the main players. If you think about it, who is still going to suffer? I think the retailers will still be the one absorbing the risks. At this moment, the players are going to withdraw their funds and my guess is they are going to channel it to Asia. Asia is slowly decoupling from the US fundamentally, and that is a good thing in my opinion. China's influence is growing and it seems that the bubble is closely managed by China. Don't think it will crash so soon though. There will be lots of new regulations and many many corrections along the way but I think its nothing serious.
In the local context, I will just have to say, Singapore isn't world class at all. The investors are just too kiasi. Its too sentiment driven in my opinion causing systematic risks in Singapore to be quite high (hopefully, this is the correct term). We have a lack of strong hands and maybe more funds from fundamental companies will be able to guide this kiasi market.
1) I think we will have more lousy days than good ones but the good run ups will be fast and furious.
2) The run up should start soon all the way till year end so the rational thing to do is to hold.
3) Short term indicators might not be overly effective as it is whipsawing too frequently now.
Anyway, to cut the long story short, investing at this moment might still be risky as global climate is still shaky. However, now might be a good time to enter as most investors have already factored in the subprime issues. China's economy might be crucial as well as it has a strong impact on sentiment here. Relative risk free commodities like Gold are showing good trends and I have thus ride on the boat even though the intention is more long term than short.
Sit tight, and enjoy the ride...Labels: NenixDreams Fund |
| posted by Nenix @ 1:52 PM |
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| Thursday, September 13, 2007 |
| A slow transition of style |
Recently, maybe due to the volatility, my time horizon is slowly switching from short term ( few weeks) to a longer term (few months). While my triggers are still the same, in which I will most probably buy at a short term level, it is more of just "getting in while its hot". I will however, look at the longer trend indicators and make more of my judgements based on that indication.
One of the main reason is that "noise" might accidentally trigger my sell signal/cut loss even when its on an uptrend. This shouldn't be the case though. Thus now, by looking at the longer time horizon, price shocks that arise will more often than not be rectified within the next few days.
Secondly, due to time commitments, it is not easy for me to monitor my stocks constantly during the short term. Sure enough, I know I will miss out on profits as my cut loss will be more delayed, but that is part of the price. My main objective is to find the balance on cutting loss on short term or loading on long term.
Remedy: My triggers are still the same, I will use the same cut loss strategies as before. However, this is where my experiement will come in. If a cut loss trigger is sounded at close, I will close my positions the next day. If not, I will look at the weekly data, looking to see if it breaches the the long term trigger. Of cos, if it triggers that signal, I have to sell it.
Rationale: I want to ignore the noise but sometimes, price shocks does trigger the exit signal. Using the longer perspective, I have the second layer to observe my holdings. Granted that the loss will be more severe if I cut using the long term, but this also allows me to filter out the noises.
Next, due to such tweakings, the buying strategy will have to change. No longer will I buy just on short term surges. Buys will have to be in the period when there is a potential retracement in the longer perspective. This is to ensure myself capturing the most of the longer time horizon.
Top up buys might be reduced (pending) because top ups usually occurs during market runs. Trying to buy at the support level of both the short and middle-term is not easy.
With all these, the exit strategy (Note that this is different from cut loss) will be different. I guess, in the nutshell, if its bought at the support level of the mid-term indicators, it should be sold using that indicator. That is the ideal case. But sometimes, if it triggers both, what should I base it on? Maybe I should base in on the short term first, as it is of higher priority? Or maybe I should base on the longer term. If I were to make a decision now, I would choose the short term. This is to better protect my capital. Until it reaches a certain price ("zero" risk), then I would switch to longer term. Haha.. this is getting complicated now.
In a nutshell:
Buy criteria
1. Risk incurred must be within limits
2. Postiion to buy must not vary too much from the intended risk to take
3. Must fulfill short term indicators that shows momentum AND mid-Term retracement (This does not mean downtrend even though it is close to a downtrend)
4. Topping up of positions not reccomended now as each batch of positions loaded should be treated on its own and not be averaged. However, if it fulfils criteria 1 to 3, then it is ok to load.
Cut loss
1. Short term indicators are still important and it will still be the rule to follow. (Maybe, the cutloss multiplier should be modified based on current market volatility)
2. As trading during the day is often guided by excessive fear or greed, EOD triggered during that time should be taken into consideration and closing it only if it doesn't reverse after mid-day. (this wont happen if multiplier is carefully set)
Exit
1. Short term indicators cut if position is loaded solely based on short term indicators
2. Short term has priority if its based on both mid-term and short term indicators
3. Long term has priority if its based solely on long term indicators.
ARgh.... seems like a lot of fine tuning needs to be done. I must make sure to back test on past records as this is one possible mistakes traders will make. They think that their refined methods will work now but thats because of a few cases. Few failed cases doesn't make the method wrong. So when fine-tuning, make sure it is an improvement. And as a reminder to myself. Do not over-optimize. This trading system shouuld be robust and flexible, behind the systematic approach..Labels: NenixDreams Fund |
| posted by Nenix @ 1:41 PM |
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| Sunday, September 02, 2007 |
| End August Highlights |
This month is rather bad due to its volatility. I have seen my profits (unrealized) cut from 70+% to a recent value of 41%. Market is still volatile, but no doubt, we have seen reversals in the price. In my opinion, it takes a lot of bad news to push the price below the bottom of the recent correction. Recently I have loaded in positions. I have decided to spread my risk by getting more equities. Like in my previous posts, what rebounded back strongly shows good support by the fundamentalists. Rotary, PacAndes, Boustead, Federal, TiongWoon, FerroChina all came back strongly.
If you ask me if I should top up or to load more in other positions, it really depends on the situation. At the moment, my current holdings have stretched my risk limit to a significant level. However, as I have now gone against the idea of cost averaging, each position loaded will be treated uniquely. For example MMPReit at 1.17 will be treated different with that of MMPReit at 1.09. Both will now have different cut loss points. I feel this is fairer as the position bought at a
lower price should not be burderned by a position bought at a higher price.
Anyway, with regards to my portfolio, during the correction/reversal, I managed to load up some STI ETF funds. To my surprise, this fund is severely illiquid with its bid ask spread being significantly huge. And furthermore, it does not track the STI. when STI went below 3000, never once did I see this fund go below this level. Anyway, this ETF is meant to be put for a longer period and I have not intentions of letting it go. The same should go for MMP Reit as I will be holding it for long periods of time. These two instruments (Reit and ETF) take up about 10+% and it will be my foundation. Other stocks are meant for trading with accordance to my trend following rules and right now, these positions are loaded because they have met my criteria. Due to fear, I did not go short and I think that will boil down to lost opportunities. Anyway, hope things are bright and rosy for the month of September, even though I think September will still be a bad month.Labels: NenixDreams Fund |
| posted by Nenix @ 2:35 AM |
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| Friday, August 24, 2007 |
| 24th August Update |
As it is, my NDF has now gone below the STI index with NDF being $1.36 and STI being $1.38. If I have to point out any fault, it would have to be due to my ill discipline. Hesitation to cut loss and selling when I am not supposed to. Have I learned a lesson? Haha, sadly speaking, I didn't. This is because recently, I loaded more position based on "feel". I guess I got lured in by improving market sentiment, thus trying to preempt my buying signal. This time round, if I managed to survive, then I'm lucky, else I just have to bear with another wave of cut losses.
I bought some CAO @ $2.52, Ferrochina @ $1.95, OKP @ $0.68 and Lyxor China H @ $16.8. Anyway, after I reach home, I calculated the potential risk. To my astonishment, CAO, Ferrochina, OKP are very risky stocks with total cut loss amounting to 5% of my portfolio. That's not healthy. To breakdown, the cut loss is as follows:
MMP Reit: $0.998 - $1.07 (N.A as this is part of my 10% untouched funds)
STI ETF100: $32.226 (N.A as this is part of my 10% untouched funds)
AsiaEnv: $0.605 (N.A as the sales of this equity will be determined by my brother)
Lyxor ChinaH: US$15.796 (This is not part of the 10% untouched funds as purchase is based on
buying signals)
OKP: $0.554 (Cutloss point based on its volatility. I forgot about the fact that it has such high risk when I bought it)
CAO: $2.14 (same as above)
FerroChina: $1.64
As you can see, the cutloss is determined based on its volatility(risk). At the moment, this is the risk present and I now have to follow my cutloss. I realise its easier for me to cut loss than to refrain myself from buying unnecessarily.Labels: AsiaEnv, ChinaAviationOil, FerroChina, LyxorChinaH, MMPReit, NenixDreams Fund, OKP, STI ETF100 |
| posted by Nenix @ 8:41 PM |
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| Wednesday, August 15, 2007 |
| Fund Price is 1 year old |
On a brighter note, my NDF fund is more than 1 year old. Being incepted on 1st August 2006 at the price of $1, it has now risen to $1.39. A 39% profit should be decent enough.
STI currently sits at $1.34, so I am still outperforming the market. haha. I guess these are consoling words for myself. Nonetheless, I've made mistakes, and I have learned them. This year, I will be hoping for still a 25% pa returns. I know setting targets especially for the stocks market is not really realistic, particularly for a trend trader.Labels: NenixDreams Fund |
| posted by Nenix @ 10:16 PM |
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| NenixDreams Fund |
| Fund launchprice on 1st August 2006= $1
Target for 2007 = Beat STI index
Current price of NDF as of 1st Oct 2007 = $1.58
Current price of STI as of 1st Oct 2007 = $1.54
Difference with STI index is 0.04
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