Sunday, January 24, 2010

Missed out on a tenfold gain

In February 2009, I mentioned that in a time of crisis there are opportunities for those who are ready to grasp them. While investors are often happy with a thirty percent gain on their investments, I often look for a few-fold gain with the help of the Book of Changes. (Refer to Crouching tiger, hidden dragon entry on 15 February 2009)

At the height of the financial crisis and just before the global share markets meltdown last March, I had indicated that an eight to tenfold gain can be made on certain shares investments, if lucky.

After the great wealth destruction in 2008, many institutional funds made back some money in 2009. Battered but good stocks recovered quite a bit from their lows in March.

If you still do not understand how and why the global stock market indices jumped so high from April to December 2009, track back the G20s meetings for that year and the record amount of liquidity (the crispy new US 100 dollar notes also found their way to Asia) pumped into the economies of the US, Europe, and the rich Asian countries.

Black hands and market makers were furiously at work, this time for the common good.

Many were churning stocks to attract investors who held on to or have moved to cash in 2008. Perhaps now you know why the investment banks had made tons of money and are able to pay multibillion dollar bonuses, while most high street or commercial banks made losses.

This brings us to the Malaysian fortune tellers’ predictions for 2009.

Some predicted that the first half of the year was good for the country while others predicted the second half to be better.

The Kuala Lumpur Stock Exchange index plunged in March and recovered with huge gains year on year in tandem with global stock markets by end December. The recession of the economy started in the second quarter of 2009 had deepened in the third quarter. Swine flu or H1N1 caused the death of several citizens straddling the two halves of 2009.

It is up to you to determine which group of fortune tellers was accurate in their predictions.

Perhaps regular readers now know with hindsight why I had not sided with any of the fortune tellers for 2009. (Refer to A touch of patience entry on 30 January 2009)

Back to the big one that got away, shall we?

While the prices of the blue chip stocks in the KLSE were recovering in tandem to the global stock markets, some low liners were drifting lower or treading water (stagnant).

In searching for some cheap stocks to buy, I looked at a share warrant lingering at 5 sen for weeks. Its ‘mother’ share was also battered. Trying to be smart, I thought I could buy the warrant either at a lower price or wait until investors start to buy the ‘mother’ share. But the syndicate pushed up the warrant instead of the ‘mother’ at a rapid rate. Once the price doubled, I did not bother to chase. Last week, the price of the warrant touched 50 sen and that represents a tenfold gain from 5.

That was a tenfold gain missed out. We cannot make huge gains every time!

But there is still time since stock markets never die.

If you do not believe me, check how long it took for Richard Wilhelm’s prognostications to unfold.

5 comments:

Zac said...

Hi Allan,

may I ask a practical question?
I believe the Yi 'speaks' to me when I use it to reflect on problems close to my expertise - moral problems and social problems.

But it does not seem to speak when I inquire about areas where I have little expertise - financial for example.

Does the Yi speak of different things to different people, or is it merely my inability to 'hear' it on some matters?

Regards,
Zac

Allan said...

It is always easier to understand Yi’s answer(s) when it speaks on our favorite subjects because of our familiarity with them.

A non scientist may not know how to act on Yi’s answer on a scientific question. The same goes for financial questions, Yi’s answer could be a tad too deep for non finance professionals.

Regards,

Zac said...

Thank you!

扇子 said...

快樂與人生,是最好的伴侶..............................

angel said...

When The popular comment layout is common, so it is easily recognized scanning to post a comment. If the comment section is in a different format, then I am going to spend more time trying to decipher what everything means.

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