Quiet doesn\'t mean no activity. A fund manager watching for the right timing to buy told me the best-case scenario is an economic recovery in 2010, a scenario which implies stock market recovery this year (1-yr lead). Fund managers are watching the FY08 results outcome to determine if there will be a 2nd fallout depending on severity of layoffs (collapse in consumer demand). A second danger is the possible collapse in USD, given the amount of $$$ America would need to print to service its colossal national debt.
isn\'t it a case where head the market lose, tail the investor lose?! haha.. with the amount of USD in print, once the economy \'appears\' to recover: 1. inflation immediately kicks in as USD weakens in value 2. commodity prices shoot up as most production capacity were impaired during the financial crisis (mines, farmers unable to borrow money to dig/plant crops) So we bring in hyperinflation that will again kill the stock market..
The only reason for this persistent obsession with analysts in predicting where the bottom is and when the turnaround in the stock market will come is due to a nagging desire to proven \"right\". Everyone is tumbling over themselves to look as though they were geniuses in being able to \"predict\" the end of the downturn, but smart folks will know that even if someone gets it right (eventually) it is probably just a pure fluke. The key is just to stay patient, stay invested in good companies and wait out the crisis. Even if it takes 5 or 10 years, someday the world will revert back to some semblance of normalcy, and economic growth will return. In the meantime, an investor can continue to collect dividends from companies which are generating decent cash flows. The most recent ridiculous news I read about were people trying to predict if the Index would close lower or higher based on January\'s Index movement, so much so that way too much attention is being paid to a random event ! There\'s just something perverse about human beings that cannot accept randomness; it\'s as if we have to search for patterns or somehow feel that it\'s imperative that we uncover a trend. Computer software and electronic charting have simply exacerbated this condition such that it is spiralling out of control.
Hi all, I\'ve been accumulating (a nicer word for averaging down)the following companies which has been sold down badly. 1. China Milk 2. China Zaino 3. China Taisan 4. Celestial All the companies above has above average moat and will in the long run be great businesses going forward. Mr Market is obviously in a panic mode right now throwing out everything in it\'s path. The severity of the selloff is incredible but not entirely surprising...especially Celestial as it has one big overhang about the refinancing of the bonds come June. As a matter of fact I spoke to the investor relations and the management is aware of the fact that rumors have been flying wild over the ability for them to successfully refinance the bonds but in the worse case scenario they have sufficient cash to redeem in full but they would be left with less cash to expand. As for the business, they are confident that even with the overall slowdown that it will remain resilient (probably less growth than earlier projection) and that with the recent drop in soybean price, their raw material cost have drop significantly but that may only translate into next quarter numbers. At least they can now afford to reduce prices and maintain margins. This is a great business and selling for 1.9 times historical PE and at approx 60% below NTA. It is at all time low and even below the IPO price in Jan 2004 that is 5 years ago when they were much smaller!! Even the convertible bond conversion price is at around SGD2++.. Looking forward 5 years from now and using an average growth rate of 10%. EPS in 2013 should be SGD 0.24 (using SGD 0.15 as base). As such giving a PE multiple of 18 the price \'should\' be in the region of $4. Of course this is the simplest of calculations and anyone can run any models they like but at the end of the day it is the business that matters and the bottom line (free cash flow) that it generates. Anyway, cheap can get cheaper but at some point not too far away the bottom will be found. Again, I\'m no master in prediction but all I\'m focusing is the business itself and what it should be worth 5 years or more from now. 1.
Brother Gary, Make sure you have enough cash for the next six to twelve months. Cruel market. Not likely to recover in the short term. Don\'t worry about the paper losses. Temasek lost USD 50 billion in paper losses and they tell us they are long term investors, right??
NextInsight
a hub for serious investors
