Thursday, April 24, 2008

Glimpses of the future

After the recent plunges of the global stock markets since January 2008, it does not take a genius to realize that markets will eventually rebound. The global stock markets having been battered for almost three months have been rebounding for the past few weeks. The only question is can the rebounds be sustained, meaning they are not dead cat’s bounces or bear traps. Any stock investor would like to know the answer in advance to this million dollar question.

It is not terribly important whether I know the answers in advance (read future) or not, what could be more beneficial to regular readers is that they can get some glimpses of the future in entries on the stock markets. Take for example the March 18, 2008 entry suggesting to readers to ‘buy low, sell high’.

Perhaps, it was coincidence that the Kuala Lumpur Composite Index hit the low of 1,166 points on March 18 after the mild rebound from the 10% plunge witnessed on March 10. From March 18 onwards, the KLCI has slowly but surely recovered to 1,296 points – registered at the close of business on Friday, March 7, and recouped the hundred over points lost in the following trading day’s plunge. Low liner stocks had also slowly climbed up from their lows. Some stocks had already recovered more than 50% from their two-year lows, while others still flounder at the bottom.

To boost the confidence of readers cum investors, I had written a subsequent entry to say that I look forward to a tenfold gain in some stocks, this year, and suggested that they can make 50% or more from their investments in the KLSE even in 2008.

Whether you have bought low to sell high or not, it is your luck not mine. Within a month, some investors, including yours truly, who had bought at the lows would have already made their 50% gain on those particular investments this year.

Over the past week or so, a few stock analysts have emerged from the closet, to say that the KLSE has touched bottom, or commented that the downside will be rather limited.

Seeing the upside, more analysts will slowly crawl out from the woodwork to call for buys and confidently give various tips. Thereafter, every analyst would jump onto the bandwagon to clamor for buys. If that happens, investors would have forgotten about the previous pains and losses to panic buy shares. By then, more often than not, they will buy high to sell higher. From experience, that scenario is a given; with history repeating itself.

The history repeat, one is actually looking for contains a much bigger picture. The signs of it happening have slowly emerged and look particularly encouraging. In a way, like others, I am also waiting for leads.

When the big picture finally emerges, one may write about it, and not before, to avoid plagiarism. Do not worry; one would not leave it too late. Otherwise, how can readers on occasions read today’s news in this blog, a week, weeks, or months in advance? See the big picture!

Meanwhile one waits cheerfully.


Thursday, April 17, 2008

Human instincts

“Laozi said,

‘When perfect government prevailed, although neighboring states within sight of each other could hear the crowing of each other’s cocks and the barking of each other’s dogs, the people of each enjoyed their own food, admired their own clothing, were content with their ways and happy in their work, and would grow old and die without having any dealings with each other.’

Yet if we tried to set the world right today by stopping up the eyes and ears of the people, it would prove well-nigh impossible.

The Grand Historian comments:

What it was like before the times of Shen Nung I do not know, but, judging by the Book of Songs and Book of Documents, ever since the time of Emperor Shun and the Hsia Dynasty men have desired to feast their eyes on beautiful women, their ears on music; their mouths have delighted in meat, their bodies in pleasure and comfort, and their hearts in power and glory.

Even if you went from door to door reasoning with them, such deep-rooted habits as these could never changed.

The best thing, then, is to let matters take their own course; the next is to lead people through benefiting them; the next to use exhortations; the next, restrictions; and the worst way of all is to fight against these instincts.”
[The Money-Makers - Records of the Historian – HY Yang and Gladys Yang]

Thus making money is not wrong to satisfy our needs and instincts, it really depends on how we make and/or spend it.

1) Refer to TTC 80 for the entire chapter.
2) Shen Nung or Yandi was a legendary emperor, before the Yellow Emperor, Huangdi.
3) The Book of Songs is also known in the West as the Book of Odes (Shijing). The Book of Documents is also known as the Book of History (Shujing).

Sunday, April 13, 2008

The money-makers

Thus it is said,

“When the granaries are full, men learn propriety. When food and clothing are enough, men have a sense of honour and shame. Ceremony is born of sufficiency and disappears in time of want.”

That is why when a gentleman is rich he delights in cultivating virtue, but when an inferior man is rich he will display his power. Just as fish multiply in deep lakes and wild beasts flock to deep mountains, humanity and justice follow riches. A wealthy man’s influence is greater while he has power, but once he loses power his protégés have nowhere to go and there is an end of pleasure. This is even more true of the barbarians.

As the proverb justly says, “A man with a thousand pieces of gold will not die in the market-place.”
So it is said,

How quickly after gain
The whole world races!
How madly after gain
The whole world chases!

Even the king of a land with a thousand chariots, a marquis with a fief of ten thousand households, or a lord with a hundred households dreads poverty, much more so, then, the common citizens on the state register.

A reflection by Sima Qian on the money-makers, much of what he contemplated more than two thousand years ago, remains relevant today. In case, readers did not spot it, he showed a deep understanding of human nature learned from the ancients.

How many scholars of current times can be said to truly understand ancient doctrines?

Wednesday, April 09, 2008

Numbers crunching

It must have been an extremely difficult and tedious exercise to project the expected multibillion dollar losses arising from the subprime mortgage mess, the toxic collaterals, and the rejected IOUs of Wall Street stockbrokers and banks. Most projections had bandied around billions, later tens of billions before two analysts from Deutsche Bank came out with a damning forecast of between 250 to 500 USD billions.

The US Federal Reserve whom many believed would be more aware of the real damage quoted a ballpark figure of 100 billion dollars. Soon others including OECD joined in the bandwagon to talk up the figures perhaps trying to reach the Hall of Fame. But none exceeded or dare to exceed the Deutsche Bank’s forecast of 500 USD billions.

In comes a lowly Chinaman named Allan who resides in an emerging market economy, who seemingly knows nothing about high finance especially those in the global financial markets, and who unashamedly made a prediction. This one man army had finally found what he wanted about the total sums of the subprime mortgages, of the toxic collaterals and some of the outstanding IOUs. With real figures to work on, crunching the numbers in the mind was amazingly easy and simple.

Give or take tens of billions, in an entry on November 24 2007, he forecasted an overall loss of 900 Billion US dollars as the worst case scenario. The projected loss about doubled the highest provisions that then existed in online publications.

Probably readers who had read the entry in his blog sniggered. What does this Chinaman know when the highly paid army of professionals in the world don’t? He provided the figures but not the workings to dissuade plagiarism. If readers had privately thought he was a fool, it did not really matter.

Perhaps they did not realize then that the team of analysts and professionals in Goldman Sachs who are the best paid in the financial world would one day by coincidence ‘agree’ with his forecast? Last month, Goldman Sachs forecasted a global loss of a trillion US dollars arising from the financial ‘fiasco’.

Yesterday, the World Bank perhaps provided a closer and more accurate forecast since the renowned financial institution with its highly paid army of professionals, technicians and advisers do not like rounding up or down of figures like what Goldman Sachs, and Allan did. The World Bank forecasted an overall loss of 945 Billion US dollars.

A figure between 900 billion and a trillion US dollars provides a good safety margin, don’t you think?

Having worked in international accounting firms, one can understand why Goldman Sachs and the World Bank took longer to come up with their forecasts. They are more responsible and obligated than Allan, which is why they took longer in the numbers crunching. Being responsible and obligated does not mean other equally renowned institutions with their big army of professionals can get their forecasts right.

Like the Chinese of old there is never any necessity to convince anybody of your wisdom. We just plod our way and move on. For Laozi had once indicated:

Without stepping outside one's doors, one can know what is happening in the world. Without looking out of one's windows, one can see the Tao of heaven.
[TTC 47 LinYutan]

Detractors would still disagree; they can always presume that they know the forthcoming overall losses or Tao better. How would I know?

Sunday, April 06, 2008

Looking for a tenfold gain

2006 was a good year for investors in low liners in the KLSE. Friends and kin who followed my tip from the Yi to buy plenty of GT shares near its lowest price probably made between a five to sevenfold profit that year. They could have made more if they had listened and bought back the shares when its price tumbled by half before the counter went back up once again.

2007 was more difficult for small investors to make money, easier for the funds because index linked stocks flew. The greedy would have lost a fortune early that year brought about by the Chinese stock market plunge in late February and early March. By the second week of April, the GT shares have gone up twenty fold from its lowest price ever. The price more than doubled from what I had bought back in late March. Did I make the twenty fold profits? Yes, but not all my money was riding on it, this time round.

Of course it would be difficult for me to find a good and sound stock in 2008 to buy since I do not look for thirty to fifty percent gains in a stock investment. KLSE investors can achieved those 30 to 50 percentage gains easily in 2006, 2007 and probably in 2008. Yes, you read it correctly, even in 2008 despite the huge early setback for many investors. Why?

At this time, there are no buyers in the stock market as indicated by a stock analyst in a recent newspaper article. The daily values traded, if you have noticed, have at times dwindled to twenty percent of 2007 top daily trades. (Remember my suggestions in the entry to ‘Follow the money’?)

When there are no buyers for stocks, what does it mean? It means that stocks are at their lowest. Refer to my entry on the strategies of the father of modern management during ancient times indicated by Sima Qian, if interested.

Half of my investments bought back recently at their lows had already rebounded more than fifty percent while some investors hummed and hawed, predicting impending crises in popular chat boxes, trying to be ShenXian (Daoist deities and immortals).

When these ‘ShenXian’ and their followers realized that the market has flown and left them behind, they will panic buy at much higher prices in order to save face and to brag about their relative small gains at a later date.

Last year, a Quanzhen heavenly immortal had indirectly confirmed my Yi chart for 2007. This year, Quanzhen heavenly immortals have indirectly confirmed my Yi prognostications for investments in the KLSE. Read together with my interpretation of the annual hexagram for 2008, I look forward to an eight to ten fold gain in some of my investments.

My annual hexagram alone provided the reason why in an earlier entry on investments, I had indicated that 2008 could be a better year than 2007 and even 2006 – where a sevenfold gain was made.

Since I cannot lead this year, kin and close friends can keep a look out for my name in the top thirty shareholders list of public quoted companies in the KLSE. It could be the ones that will provide a tenfold gain in 2008.

Who knows? I am not telling, neither would the Yi and the Quanzhen heavenly immortals.

Friday, April 04, 2008

Of students and masters (7)

In a Daoist forum, a member had asked about how to find good neidan teachers in a certain part of USA. In reply, another member quoted a slightly revised version of Buddha’s instructions to his cousin, Ananda on what students should do after his passing.

Since the revised version was not attributed, I had to Google the source. Apparently an author had paraphrased Buddha’s words on his website without giving credit to or quoting the source. It appears that the instruction left behind by Buddha before his death is quite popular and carries the heading of

‘Be a lamp unto themselves.’ :

‘And whosoever, Ânanda, either now or after I am dead,

shall be a lamp unto themselves,

and a refuge unto themselves,

shall betake themselves to no external refuge,

but holding fast to the truth as their lamp,

and holding fast as their refuge to the truth,

shall look not for refuge to any one besides themselves--it is they, Ânanda, among my bhikkhus,

who shall reach the very topmost Height!

-but they must be anxious to learn.'

[Chapter 2, Mahaparinibbana Sutta - The Book of the Great Decease - T W Rhys-Davids]

What a wise instruction left behind by the great master!

Of course students would be perturbed when a great master is about to leave them behind. However it appears a bit misunderstood by some, on the web, on what went on behind the thought.

In the Sutta, Buddha told Ananda that unlike the closed-fist of a teacher, he held nothing back from his students – which meant he taught them everything he knew, including meditation.

Therefore his students can stand on their own two feet and practise on their own. And need no further instructions from other sources. They can be their own guide (lamp).

Another thing is to hold fast to truth or sincerity within and they will need no other teachers. There will be a guiding light (lamp) within.

To reach the highest level, students must be anxious or earnest to learn.

Is there any difference from what the other two great sages, Laozi and Confucius taught? Not much. If only students can be earnest and sincere, they can become wise by studying the doctrines of these three ancients.

However, students need to learn neidan from a good teacher, before they can be a lamp (guide and light) unto themselves.

Through diligent study and practice of what the ancient Classics teach, it can be simple and easy once we arrive at clarity to become a lamp unto ourselves, and at times, unto others.