I attended the inaugural MasterYourFinance.com gathering on 18 Oct 10 at SMU Conference Hall 1. The event was generously sponsored by CMC Markets. As expected, the turnout was good and filled the 200+ seats at the conference hall.
There were 2 topics altogether, “Profiting from Different Market Conditions” by Mr Goh Jun Yi from CMC Markets and “How to Position Yourself for Year 2011” by Mr Dennis Ng from MasterYourFinance.com.
I’ll just summarise some of the key points in during the gathering.
Profiting from Different Market Conditions
Despite taking a position, Mr Goh Jun Yi gave compelling reasons why you can be bullish or bearish. Either side could happen and he mentioned to be nimble as a trader, hedged and weight your position to one side when things turn out clearer.
If you are a bear, you can
- Buy defensive stocks in sectors like utilities, healthcare and consumer staples
- Buy gold
- Buy CHF and JPY
- Buy US T-Bills and Japanese Bonds
If you are a bull, you can
- Buy stocks in financial, oil & gas, and property sectors
- Buy small to mid cap stocks
- Buy crude oil, natural gas and copper
- Buy AUD and EUR
- Buy Asian and Australian bonds
How to Position Yourself for Year 2011
Dennis on the other hand, is bullish about the market, but wary about the cliff at the end of the climb.
Much of his opinions were already captured in his MyPaper article: 6 Oct 10 Mypaper – 回顾过去展望2011年. I have translated to English for your convenience if you do not understand mandarin:
In a previous article on 2010 stock market outlook, I mentioned that STI is likely to gain around 10% to 3200 pts, and not likely to overdo the superb 100% return in 2009. True enough, the recent STI closed at 3157.50, about a 9% increment.
In the same article, I have also mentioned that most blue chips, like the 3 local banks, have limited upside in 2010. DBS started at $15 for the beginning of the year and closed at $14.36 recently. The promising were the 2nd and 3rd liner stocks like Hotel Properties and Yangzijiang. Hotel properties started at $2.35 and closed recently at $2.80, a 19% increase. Yangzijian began with $1.20 and now at $1.78, a 48% increase.
Drop in Demand for HDB Resale Flats
HDB is planning to introduce 22,000 new unts in 2011 and this in my opinion, would result in an oversupply. Hence, the demand and the price of HDB resale flats are likely to come down. With the new measures implemented on 31 Aug 10, private home owners cannot buy HDB resale flat (must sell private property within 6 months). There are about 10% private home owners in the HDB resale market. In addition, permanent residents take up 30% of the demand for resale and most of them would be put under the same restrictions if they have properties in their homeland. Hence, you would expect a drop in transactions and cash over valuations for the next 6 to 12 months.
Gold and Silver would continue the bull run
In the beginning of the year, I have emphasized that gold and silver would continue to rise in price. Gold has gain 18%, from US$1,100 to US$1,300. Silver has gained 29%, from S$17 to US$22. Relatively, silver would have more upside than gold.
Asian stocks may rise
The Fed has been printing money and flooding the market with liquidity. Some of these funds would move to the stock market, resulting in a rise in demand and price in stocks. With the weak USD and Euro, it is likely money would flow to Asia. As I speak, the Indonesia and Philippines stock markets have already made historical highs (more than the peak of 2007). I would want to warn investors that we should be cautious when the market is rising irrationally. On the contrary, investors should be prepared to sell.
Financial Crisis may repeat itself
US has been pressuring China to allow Renminbi to rise. And this may escalate into a “currency war” in 2011. What’s more worrying is the strength of US economy. If the injection of liquidity into the markets does not help US economy to recover, the loss in confidence may result in another financial crisis. Let’s hope it does not. Being retail investors, we cannot control or prevent a financial crisis from happening, but we can be prepared for it. We must protect our capital as much as possible, and after the crisis, buying stocks at depressed prices would be the best way to gain wealth.
In addition to the article, he mentioned he was none wiser to know when the crisis would be coming but according to him, it should be around end-2011 or 2012. It maybe brought about by the currency war that is slowing brewing currently, as well as the weakening US economy.
This might be the last phase of the bull run and the train may leave without you. The next run maybe in a few years time. Typically in the last phase of the bull run you will see penny stocks outperform. He quoted a funny analogy: When the high tide comes (market bull run), all types of ships (companies), be it cruise ships (good companies) or sampans (lousy companies), they all will rise. Only the submarines (incompetent companies) will remain underwater.
Dennis commended a student of his, James Tai, who applied the stock picking techniques and uncovered the undervalued Orchard Parade, and benefited the graduates and Dennis himself (me inclusive ).
If you are interested to learn how to pick cruise ships and not submarines, and would like to catch the last train, you can register for Dennis’s workshop to learn more about it.