Friday, March 02, 2007

Building castles in the air

Human nature has never changed since time immemorial. In the mad rush to make more money, traders overtrade. First it will be greed, then fears and panics if markets turned against them. Those who throw caution to the wind in a fast rising market will certainly have cause to regret for their reckless actions. Denials will come much later. If traders have taken to heart that overtrading forms the main cause for worldwide bankruptcies, perhaps they will be more cautious.

Many investors and traders have been building ever bigger ‘castles in the air’ before the worldwide stock markets plunged on Tuesday 27 February 2007, when the Shanghai Composite Index fell 8.8% triggering heavy falls across Asia followed later in the day (because of the time difference) by Europe and the US. If investors have forgotten or unwilling to take profits for fear of losing out on further gains then they could rue this emotion called greed. Greed quickly turns into fear and panic when markets turned against investors. The herd mentality (part of human nature too) takes over and the mad rush to exit markets turns into a stampede as witnessed last Tuesday.

When market prices run up too high for months on end or in a short few days like in the KLSE, it is not wrong to lock in profits. Investors can then hold cash and bargain hunt when shares prices plunge. Just like the waxing and waning of the moon, markets rise and fall, it is all part of change. And predicting change is the specialty of none other than the Yijing. (The Book of Changes)

Unless you are guided by the Zhouyi and/or the ShenXian, you may not know the timing of share market(s) plunges or rises. Therefore one had warned Malaysian investors on Saturday 24 February 2007 to be careful and to invest in shares with fundamentals even giving an example of the volatility of speculative counters. With the past week’s turmoil, shares with fundamentals did not fall as much as the speculative stocks. No one seemed to have taken those hints. One has been taking profits since the 21st of February and has cleared the bulk of my shareholdings on rebounds on the 28th and the following day.

According to the yearly Yi charts and frankly speaking, I had expected the big plunge to happen next week even though it sometimes occurs during this time of the year. (Akin to the ‘Selling in May and go away’ phenomenon discussed last year.) Yes, one is also aware that few Yi aficionados really have an ear to this. A number of them prefer to learn or put their faith in popular hybrid systems used by fortune tellers and Fengshui masters, to determine the timing of Yi changes. Or they prefer to follow chartists and shares analysts (these professionals rely on historical information to determine future patterns) rather than the Yi. Can these fortune telling systems and charts accurately predict the rise and falls of share markets? Over the past three decades, one has not seen any. Even Mr. Marc Faber known as ‘Mr. Gloom and Doom’ who manages a hedge fund in Hong Kong had given better predictions of falling Asian markets.

On Tuesday, one had explained to my son, Kong Chian (his given Chinese name means ‘Bright Future’) and showed him the Yi yearly charts why the KLSE had plunged. I had also told him about the story that I rued the day back in 1994 when one did not listen to the Yi but listened instead to a message from a Daoist heavenly immortal (Xian) passed on by a colleague. The Yi had told me to sell all the shares by the 18th of February that year. However the message from the immortal said the share market was still good till mid March. The KLSE plunged by end February 1994 and all the paper profits worth millions disappeared in the ensuing correction. Months later one found out that the temple medium based in Muar, Johor had been corrupted. It was already too late. That is why one chose to follow the Yi instead of ShenXian (Daoist deities and immortals) from then on.

On the same day, one joked with my daughter, Choy Cin (her given Chinese name means ‘Colourful Angel or Immortal’) that half the wall of a new house that I planned to buy with the profits has fallen down. After an explanation, she still thought that her father did not have enough money. She suggested in the quiet that I can use her savings in the bank to buy a house! If readers do not understand the crux of the joke, perhaps some may understand this:

The wall falls back to the moat. Use no army now. Make your commands known within your own town. Perseverance brings humiliation.

Castles in the air can quickly turn into shattered dreams if we do not realize profits or if our beloved theories fail to hold water.

The determination of time factors are incorporated in hexagrams and explained in the ten wings, yet theorists hold fort and try to convince Yi students that hybrid or derivative methods work better. Well, if it looks fine in theory or in their minds to build ever bigger castles in the air, bully for them. Fallacies always lead to that.

As professional Yi diviners, we should put money where the mouth is. Only when something works well after extended divination practice, can we propagate the proven method. Students using such methods cannot go far wrong since they have been extensively tested over time.

What good is a belief if faith is all that we have? People can keep to their beliefs; I will follow the Yi, the ancients and the wise. The scope of the Yi is infinite. If aficionados want to limit their own knowledge and study hybrid/derivative systems to beef up their Yi studies, it is fine. However it would not be proper conduct to mislead Yi fellows with such theories. If you truly believe that these theories work with Yi divinations, prove it.

Some readers could have by mistake assumed that my writing about the Yi and the cultivation of the cardinal virtues has something to do with religious studies. The cultivation of virtues is related to the proper conduct of a Junzi and the Yi transcends religion. If they fail to understand this, time and time again, perhaps they should stop their tinkering with the Yi. While these aficionados hinder their own Yi studies, earnest Yi students and I will continue on this path:

Bearing with the uncultured in gentleness, fording the river with resolution, not neglecting what is distant, not regarding one’s companions: Thus one may manage to walk in the middle.

'In times of prosperity it is important above all to possess enough greatness of soul to bear with imperfect people. For in the hands of a great master no material is unproductive; he can find use for everything. But this generosity is by no means laxity or weakness. It is during times of prosperity especially that we must always be ready to risk even dangerous undertakings, such as the crossing of a river, if they are necessary. So too we must not neglect what is distant but must attend scrupulously to everything. Factionalism and the dominance of cliques are especially to be avoided. Instead each man should do his duty.' [W/B]

Another good line for your studies and discernment is this:

No plain not followed by a slope. No going not followed by a return. He who remains persevering in danger is without blame. Do not complain about this truth; enjoy the good fortune you still possess.

The final line about the timing of recent events in the share markets and on the web before ‘the wall falls back into the moat’ is this:

The sovereign I gives his daughter in marriage. This brings blessings and supreme good fortune.

What further blessings and good fortune can shares investors ask for? In their mad rush to chase their ever growing dreams, many deferred realizing profits. Much blood has been shed in the world markets the past week and further losses can be expected. The giving and receiving of ‘hoongpow’ period will end this Sunday, the 4th of March, the fifteenth and last day of Chinese New Year. There will be no more red packets for anyone, therefore expect further falls in the KLSE next week what with the heavy delivery of scrip.

If investors in the KLSE are still highly leveraged, reduce it by selling shares. It has become one big battlefield out there. Any overtraded investor can be ‘killed’. Stay alive to fight another day. You could quickly run out of money if you decide to top up (never ending) margin calls in a falling market. This is the best one can suggest, since no one spotted the recent indications given by the Yi, my various hints and several warnings. Some of the Yi indications include these two lines:

The first line in Fu means: Return from a short distance. No need for remorse. Great good fortune.

The second line in Fu means: Quiet return. Good fortune.

If we achieved great good fortune by investing in shares, followed by blessings and supreme good fortune which later dwindled to good fortune and we still do not want to return by realizing profits, then there will be occasion for regrets if not humiliation when the wall or ‘your castle in the air’ falls back into the moat.

Yours truly has made a quiet return and received good fortune. One has left the battle field to others and now lives in peace. And cheerfully waits for the right timing to go into battle, once again. By doing this, perhaps one lives in the essence of the Yi and the Way to master one’s fate.

Therefore with the help of the Yi if one can foresee the future, where are the restrictions of time and space? Is this not the profundity of the Yi?

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