Sunday, December 14, 2008

‘Where angels fear to tread’

If you are feeling blue like most stock investors this year, perhaps you can find some solace with the ‘gods’, legends, and market gurus who have also been badly hurt by the financial tsunami. In a way, we can also learn something from their laments:

Headlines: ‘God of Stocks’ tells of pain

Lee Shau-kee, even after an impressive surge in the stock market yesterday, wants everyone to forget he is known as the “God of Stocks,” admitting that followers have lost money after listening to his advice.

‘One time, I received letters from investors who followed my opinions. One of them said he lost much money in stocks and asked me to compensate him for losses.’

‘That person said he was so pathetic that he borrowed money from relatives to buy stocks and had to repay them. He asked if I could lend him money.’

After an investor asked Lee about his stock picks for next year, he refused to respond.

Earlier though, the veteran investor said “bliss will come out of the depth of misfortune” for the stock market next year and he hopes it will recover soon.

[ – Alfred Liu, Tuesday, Dec 9 2008]

Hope is eternal even for gods, much more so for mortals like us.

I still remember his two major wrong calls straddling 2007 and 2008. In May last year, he predicted the China stock market would collapse, instead it doubled. By the first half of 2008, like many other market gurus, he called a bottom and predicted that the Hang Seng index will hit 28,000 points by August. The Hang Seng went south all the way to 10,676 points by Oct 27, before it rebounded. It closed at 15,577 points on Dec 10 2008.

Mr. Lee, a HK property tycoon, has good intentions, put money where his mouth is, and a philanthropist.

Like many other veteran investors, perhaps he was blindsided by the severity of the ongoing financial tsunami.

Hear what this US legend has to say:

“The thing I didn’t do, from Day One, was properly assess the severity of the liquidity crisis. Every decision to buy anything has been wrong.” – Bill Miller, manager, Value Trust
[The Wall Street Journal/Markets Dec 10 2008]

Under Mr. Miller’s leadership, his Value Fund had been the best US performer for almost two decades. The legendary Mr. Miller called market bottoms since March this year and averaged all the way down on his picks in the US finance sector, some of which went to zero or near that. His fund lost 58% since January 2008 and currently ranked the worst performer of the US Value Funds. Apparently, some angry clients have recently called for his head.

In case, you still do not believe the ancient advice for the able to go into hiding when Heaven and Earth close, listen to what this fund manager or market guru indicated:

“There’s no place to hide,” said Eric Kuby, chief investment officer, North Star Investment Management Corp in Chicago.
“It’s clear that the economy is really soft for the next few months at least. The news will continue to be bad and everyone knows that.”
[Reuters Dec 7 2008]

With hindsight most can see clearer.

Those with prescient would have lain hidden well before the financial tsunami hit, and should count themselves lucky for not listening to the various ‘ShenXian’, legends, market gurus, and analysts who kept on calling bottoms. The rest is left to hope and fate.

Amid the deluge of gloomy news, it can be heartening to read some good news reported by CNN online a few weeks ago. That of a senior US citizen who had experienced the Great Depression and who has all his money held in cash, Certificates of Deposits, US Treasuries and bonds. He had worked as a dispatch clerk for a securities broker before the Market Crash of 1929 and ever since then has never believed in anything good about stocks. Lucky fellow!

After reading this entry, perhaps kin, good friends and regular readers can understand why since January 2007, I have discarded the baggage of giving stock tips, creating luck for others, and instead concentrated on helping readers cum stock investors to minimize their losses, after advising them to create their own luck.

In Bull Runs, almost every stock investor can make gains. Anyone can become a ‘ShenXian’ by giving good stock tips.

When it comes to Bear Markets, even the best of the best or those guided by the real ShenXian have lost fortunes. Unfortunately for most investors, 2008 turned out to be one of the greatest Bear Markets, the world has ever seen.

If you have been badly burnt in your investments, plod on. Play computer games (or the recently invented Wii) to pass time. (Thai tycoons who had lost their fortunes during the Asian Financial Crisis did that.)

Life is precious. Hope is eternal.

One day, you can recover your losses from the markets. Just do not ask me when; since it can be next year, or ten years from now. How would I know? I am just a mortal like you and not a ShenXian.

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