Friday, March 28, 2008

More on ‘Shan Dao Shui’

It has been a while since I blogged on things Daoist.

One of the cryptic messages from a Quanzhen heavenly immortal, given fifteen years ago, was a challenge for me to do ‘hills pour water’ or ‘Shan Dao Shui’. Refer entry on ‘When you can do hills pour water’ dated October 6, 2005 where readers can learn something about the Image, trigrams and neidan.

In that previous entry, I have indicated that ‘Shan Dao Shui’ referred to Hexagram 39 Qian / Obstruction of the Zhouyi.

The Image:
Water on the mountain: The image of Obstruction. Thus the superior man turns his attention to himself and molds his character.

Difficulties and obstructions throw a man back upon himself. While the inferior man seeks to put the blame on other persons, bewailing his fate, the superior man seeks the error within himself, and through this introspection the external obstacle becomes for him an occasion for inner enrichment and education. [W/B]

With the prevailing difficulties and obstructions in the global financial and stock markets, Yi students and readers can learn some wisdom from the above commentary. For the more discerning, it has something to do with Tao and Heaven.

A deeper interpretation for those who cultivate:

To reach a higher spiritual level and clarity, the superior man meditates, and cultivates his character.

In Obstruction, ‘the southwest furthers’ because he goes and attains the middle – Commentary on the Decision.

If neidan practitioners can understand what is said, good, if not, then it is too deep.

To understand and practise dual cultivation, how to achieve clarity, why the southwest furthers, and where the middle (Zhong) is, will take several years of earnest study and practice. Whether we can the right persons or not, depend on our efforts and cultivation.

Along the Way, a heightened spirituality may help you realize why Heaven is on the side of the good just as Laozi have had indicated.

Tuesday, March 18, 2008

Buy low, sell high

Stock investors are indeed strange fellows; they tend towards the herd mentality. When they see everyone else buying stocks and shares, they will rush in to buy some thinking they could lose out by not jumping onto the bandwagon. The urge is too great to ignore. Then when everyone else turn panicky and sell down stocks, they will follow suit in a rush to get out of the market. In bull runs they will make some money like most everyone else but often lose their shirts in bear markets.

Instead of following the ancient adage to ‘buy low, sell high’, they would buy at year highs hoping to sell higher. Actually, many low liner stocks in the KLSE had reached their year highs by spring 2007. Those who had bought these stocks then and still holding onto them would have lost a fortune by now. Were they the ones selling down the market recently in the mad rush to get out of the KLSE? Your guess is as good as mine.

From 2005 to date, except for the prior warnings by the Yi on a wanderer stealing my cow in 2007 and not to buy a particular stock even if one had great power both of which coincidentally occurred last August, I have not made any great mistakes in the stock market. Following the Yi prognostications and annual charts, one was lucky to avoid the deep plunges that occurred over the past few years.

However this year is something completely different. There are too many pitfalls for the unwary and the Yi has told me not to lead. In order to remain blameless, if I write anything on the KLSE, it will be on what I will be doing. If I go for a long holiday, after disposing of my stocks, please be careful. (Remember the entries on my 1993 experiences) Like in recent entries, I will still give some lead time for regular readers cum KLSE investors to buy or sell stocks.

Think of my March 2, 2008 entry where I blogged that half of my investments were sold down at a loss with more selling later. The KLSE was still okay the week before the March 8 elections. The KLSE meltdown took place on March 10. After the meltdown, I mentioned I would buyback some shares if they fall lower or have reached my target. Yet readers still complained about insufficient notice given or have asked when the KLSE shares prices will move back up.

Heaven’s secrets are often revealed in Daoist temples and a good place to change your luck for the better. If you want to become a ‘ShenXian’ to pass on readings to your friends and relatives on how KLSE stocks will perform in future, go to a Daoist temple and ask the real ShenXian. In their temple, the divine can give all the information you require. But take note that, at times, even their divine messages can be wrong.

Meanwhile, I have bought back some stocks. They have fallen by thirty percent from the price that I have sold a fortnight ago. When fundamental sound stocks fall a further thirty to fifty percent from their recent year lows because of unwarranted panic, it could be the right time to buy low.

What investors want to do is entirely up to them.

I reserve the right not to blog anything about the KLSE, if readers get too demanding.

Sunday, March 16, 2008

Wisdom of the ancients

The Master said,

‘I am not one who was born in the possession of knowledge; I am one who is fond of antiquity, and earnest in seeking it there.’

[Analects 7.19]

In the accompanying notes, Legge mentioned that “according to the commentators, this is again a wonderful instance of the sage’s humility disclaiming what he really had. In the statement, Confucius also declared his love of the ancients and all their works.”

Some of the exemplary ancients Confucius was fond of were Yao, Shun, King Wen and Duke of Zhou. If Yi students have not heard of ancient Emperors Yao and Shun, they would at least know who King Wen and the Duke of Zhou (Zhougong) were. The Judgments to and the lines of the sixty four hexagrams in the Zhouyi were accredited to be penned by King Wen and Zhougong respectively.

Yet we find modern Yi scholars casting aspersions that Confucius had not studied the Yi. The Chinese would say that this type of scholars had been ‘reading dead books’. Probably they would also claim that they know much about the Yi. Without earnestly seeking and sincerely understanding the thoughts of antiquity, could they really?

Little wonder, the great sage intimated (to his students, and now the readers), ‘I am fond of antiquity, and earnest in seeking knowledge there!’

Monday, March 10, 2008

KLSE meltdown

It is not fun holding stocks that got battered in the Kuala Lumpur Stock Exchange meltdown today, March 10. From Friday’s close of 1,296.33 points, the KL Composite Index fell to 1,166.70 points, representing a fall of ten percent or 129.63 points, in the early afternoon session which triggered the circuit breaker. All stock trading was suspended for an hour. It was the first time since implementation that the circuit was broken. Hope the second and subsequent times the usage of the circuit breaker will be for KLSE daily rallies of ten percent or more.

When the stock market reopened an hour later, the KLCI dipped another 9 points before bargain hunting or shoring up of prices set in. The KLCI closed at 1,173.22, a plunge of 123 points or 9.5%. That was nothing compared to some government linked counters and low liners which went limit down(s) – 30% and more.

One of my favorite GLC stock almost reached my targeted buyback price set last July. At the time others scoff at my suggestion, arguing that the government would not allow such a horrendous fall of 60% to happen. And that many investors would have gone bankrupt if it happens. Well, I do not know how many have gone or will go bankrupt but if investors have sufficient holding power, stock prices will recover after hitting rock bottom. It is just a matter of time for prices of good and fundamental sound stocks to recover from internal and external shocks.

However take note that the KLSE has today joined other Asian stock markets in technical bear territory. Since the intraday high of 1,524.69 points reached on January 14, 2008, the KLCI had fallen by more than 20% to the intraday low of 1,157.47 today. A fall of 24% in blue chips prices within two months is heartrending to any investor.

The stock analysts who had clamored for buys, the ‘sifus’ and ‘ShenXian’ have all gone quiet, the diehards and ‘professionals’ continue to shift their targets based on hindsight. No surprise since I have seen it all before over the decades. Who does not know how to recommend stocks and make money in a bull market? But the blame starts to pour in when markets or stocks tumble.

That is why I do not recommend individual stocks to readers, here or elsewhere. I just tell readers what I would do based on the Yi chart and prognostications hoping that they too can catch the right timing to buy or sell stocks. Making money in the stock market will prove difficult in 2008 if you have already lost a large part of your capital.

In case some readers want to know, I am still using excess ‘foreign’ capital for the trades, a reason why I follow the Yi. And no, I have not bought back any stocks today. Perhaps waiting for better bargains?

Sunday, March 09, 2008

Further reduction of ‘troops’

The headline in Bloomberg Asia on Friday March 7 says it all. The Hang Seng Index led falls in Asia with the worst weekly fall since 2001. Week on week, the HSI had plunged 1,830 points or 7.5% to close at 22,501.33. While the KLSE fell 61 points or 4.5% and the Singapore Stock Exchange fell 160 points or 5.29%. One was lucky to have disposed of half my investments the week before in line with the Yi chart for 2008.

Financial institutions, fearing the worst, have started to rein in over-excessive credit lending to hedge funds, private and public investment institutions exacerbating further falls in equity, fixed income and property markets across the globe with forced margin selling. Shareholders of another Australian investment company have lost four billion A$ after the public quoted shares have fallen 90% plus since its peak in May 2007. According to Bloomberg, shares of its major shareholders, who no longer were able to top up margin, were forced sold recently.

Anticipating things to go further into awry and because of another depicted major obstacle in the Yi chart next week, I have recalled more troops from the battlefield – the KLSE. The margin accounts now hold surplus cash to buyback stocks when opportunity beckons.

With the surprised election wins on March 8 2008 by the coalition of opposition parties where they took majority rule over five states – Kelantan, Kedah, Penang, Perak and Selangor – and which returned the government of the day with a reduced simple majority instead of the previous 90% control, speak volumes. The people have spoken. If ministers can lose their deemed safe parliamentary or state seats to the opposition, the tide has indeed changed. If after this lesson, the ruling government alliance for the past five decades still acts with much complacency, arrogance, non accountability, blatantly ignoring the rights of every Malaysian citizen including those of children, and allowing corruption to persist at the highest echelons of power, perhaps one day they may come to rue their actions.

Of course it also depends on whether or not the opposition can do a more efficient and effective job in their respective states than the previous state government in the next few years. Confucius and Mencius would advise these new rulers: Rule the people with benevolence and justice. Prosper and then educate them.

The 1.2 % fall of the Dow Jones Index on Friday and the unexpected general election results would probably cause the KLSE to plunge on Monday, March 10. Foreign funds may decide to exit the stock market. Unless there is real panic selling across the board, it may not be the right time to buy, since stock prices may fall further, compounded by margin calls.

Thursday, March 06, 2008

Gently does it

Sometimes it pays to read how teachers explain their thoughts on the ancients. Professor Sam Crane wrote an interesting article, ‘Admonish them gently’, on how a lady tried to persuade her elderly mother to give up on her ‘untidy’ habit of hoarding discards but got a rebuff from the parent. Upon reading her suggestion on how to deal with an aging parent, Sam was reminded of what Confucius said in Book 4. 18:

The Master said, ‘In serving his parents [Fu Mu], a son may remonstrate with them, but gently; when he sees that they do not incline to follow his advice, he shows an increased degree of reverence, but he does not abandon his purpose; and should they punish him, he does not allow himself to murmur.’ [Analects – Legge]

Upon reading his article and the different translation provided which spelt out ‘mother and father’ instead of ‘parents’, it triggered my thoughts back to the Zhouyi. Where have I read it before?

Ah ha, Work on what has been spoiled!

I have wondered where the great Chinese sages learnt their wisdom. Perhaps the answers were there all along waiting for earnest students down the ages to carefully examine and investigate the ancient Daoist and Confucian doctrines, in order to link the teachings to their old book of wisdom – The Book of Changes. The Zhouyi had preceded both Laozi and Confucius by about five centuries.

In layman terms, let us explore what the Yi teaches in Hexagram 18 Gu / Work on what has been spoiled:

The Chinese character Gu represents a bowl in whose contents worms are breeding. This means decay. It has come about because of the gentle indifference of the lower trigram [wind] has come together with rigid inertia of the upper [mountain], and the result is stagnation. Since this implies guilt, the conditions embody a demand for removal of the cause.

The Image:
The wind blows low on the mountain: The image of Decay. Thus the superior man stirs up the people and strengthens their spirit.

Six at the beginning means:
Setting right what has been spoiled by the father. If there is a son, no blame rests upon the departed father. Danger. In the end good fortune.

Comment: The departed father is not at fault, if the son compensates for the decay his father allowed to creep in.

Nine in the second place means:
Setting right what has been spoiled by the mother, one must not be too persevering.

Comment: If you love your mother, gently does it! (Take note that a woman can be more fragile than a man.)

Nine in the third place means:
Setting right what has been spoiled by the father. There will be little remorse. No great blame.

Comment: Remonstrate and even if there are minor discords and annoyances, do not abandon the purpose. Why would a son murmur when he knows what he has to do to arrest and cut away the decay?

Six in the fourth place means:
Tolerating what has been spoiled by the father. In continuing one sees humiliation.

Comment: The son is too weak to do away with the decay – and has abandoned ship!

Six in the fifth place means:
Setting right what has been spoiled by the father. One meets with praise.

Comment: Success.

Nine at the top means:
He does not serve kings and princes, sets himself higher goals. [W/B in italics]
Comment: After duly serving his parents, and having set right what has been spoiled by them, he withdraws from public life in search for excellence.

If you still cannot see the link between what Confucius had taught in Book 4. 18 and Hexagram 18 Gu, try tying up my simple commentary on the lines to the key words of the ancient sage.

Do not worry too much if the discussion appears too deep. This entry attempts to provide ‘food for thought’ for well read Yi and Confucian scholars to discuss what the great sage has learned from the Zhouyi?

Sunday, March 02, 2008

Reduction of ‘troops’

No, I am not discussing the reduction of US troops in Iraq, but it is good to hear that some are finally going home to their families. This entry is on the reduction of my ‘troops’ fighting in the Kuala Lumpur Stock Exchange.

Things took a turn for the worse on February 13th, when the Malaysian Prime Minister announced the dissolution of Parliament for an early general election. Voting in members to Parliament and state assemblies will take place next Saturday, March 8th.

Politicians and their supporters are on the road, busy canvassing, instead of buying they could be selling stocks; owners of public quoted companies may also sell to raise sufficient cash for big political donations; lots of stale bulls still want to get out of the market; with local and foreign funds waiting at the sidelines for the election results, who will be out to absorb the ‘relentless’ selling?

Therefore, instead of following the rebounds of global stock markets, the KLSE headed south and drifted for the next couple of weeks. The daily traded values had also dwindled. The expected Chinese New Year rally had failed to materialize. Forced margin selling of second and third liner stocks were particularly evident. Otherwise, who would want to sell stocks at their fifty two weeks or year lows?

In line with market sentiment and because of the timing, I have reluctantly withdrawn half the ‘troops’ from battle by cutting stocks on Thursday and Friday, taking some hits. A painful choice but it could turn out to be wise. Why?

Because according to the Yi chart for 2008, the KLSE and the Chinese stock markets will face major obstacles next week. With the Dow Jones’ plunge of 315 points or 2.51% on Friday, February 29, it looks like these stock markets will head for a big fall on Monday, March 3rd. Let us just hope that Dow Jones will not suffer a Black Monday crash since things look increasingly complicated and uncertain in the US, but not totally unforeseen by analysts and experts.

If things go further awry, I may withdraw the remaining troops from the battlefield. No point for the army to ‘wait in blood’ and get massacred by free falls in the KLSE. Holding a 100% cash position can turn out to be a good strategy, at times, especially under extreme circumstances. Think of the havoc in the KLSE and the Chinese stock markets since November 2007 where many an investor including owners of low liner stocks and syndicates has lost huge sums of money.

Apparently, the aftermath of the implosion of the mountain has yet to touch rock bottom. Most readers cum investors had not listened that October and November. Perhaps they thought I was joking or had misread the Yi. Or perhaps they were guided by the real and/or the false ShenXian.

It is rather unfortunate, but every investor has to learn to live with uncertainties unless they are constantly guided by the Yi. Even then, Yi diviners still have to learn how to determine the timing. Since a good prognostication on an investment can sometimes take years to unfold. But that is a story which had been told.

Take care.