Sept-30 Gold vs. Oil

As all you can see today, gold does NOT necessarily bound to oil.

I think Gold could hit 1000 within this year.

Sept-28 Recap commodities: Gold Coal Oil and others

People asked me whether I am still bullish on coal and other resource stocks, so I would like to recap this a little bit.

We know the market is basically a cyclic business: Once something was quite bullish in the near past, it may turn to bearish in the future. At least this turn over has higher probability. Coal stocks have amazing performance, which is NOT normal at all, so to me, it is unlikely to have another spike in the short term. The same thing holds for fertilizers. If you check the historical agriculture price, e.g., corn, there are spikes every decade, it's quite a long period due to the nature of agri-business. Big money does NOT likely to flow into one particular product in short term as short of common interest.

Let me tell you a story how the price is kicked up dramatically in short-term. Chiefs in Wall Street have lunch with each other in the steak house, talking about: Hey, you know there is some shortage of Coal in South Africa and Australia, don't you? I guess the price may go up a lot... bla bla..., the information has been exchanged all the time so that big money and smart money flow into the market. We, more precisely, tarega and I, saw this change when Coal stocks outperform markets for two weeks with huge volume, therefore we sent out the signal. Although Oil spiked a lot but we didn't cover many oil stocks, as I think coal stocks are going to outperform due to smaller caps and limited resources. The fact proved this.

However, these are past. In the foreseeable future, I personally only bullish on Gold and light metals. We all know why Gold is valuable for past thousands of years and this won't be changed. If you want to say away from stocks, you can consider an ETF GLD and an ETN DGP, the second one is a note published by Deutsche Bank which tracks 2x gold price. For light metals, I like them for long term as demands from China. In the past, China can provide sufficient light metals such as Aluminum, but this may change in the next two years. The high speed train and commercial airplane business will significantly increase the demand of light metals so China will become an importer instead of exporter of Aluminum soon. Everything needed by China is expensive, think about iron ore. Given the low price of Aluminum stocks, it is worthwhile to add them to your watch list. 

Remember, every bull market starts with low commodity price and we are close to this point. My strategy will be to accumulate quarterly in the next 12-18 months can wait bull market.

Sept-22 An account in Morgan Stanley or Goldman Sachs

You will probably have an personal banking account provided by Morgan Stanley or Goldman Sachs, so that they can use your cash as the backbone of their gambling game. Sounds funny but this gonna be the reality in the near future.

From now on, there will be NO pure investment banks on this planet. The world did experiments on investment banks for nearly a century and then this crisis proves this kind of bank cannot stand alone.

To be IBs don't not have any assets except for their office building and staff. The numbers and their holdings are barely virtual. They real money they can touch is mainly used to buy lunch. Finally, they find this may not work so from now on they want money from customers.

How this affect the stock price for GS and MS? No doubt, the US government won't let them down this time, but they won't be the next hot spot of market. For example, when you find the food price begins to surge, you may fine how smart Buffet and Coca Cola are, as they bought enough shares in the food and beverage market.

Sept-19 Buy? Sell? Hold?

People may quite anxious on the rising financial stocks and ask me whether to chase in.

I would like to ask you to pay attention to those who are heavily damped but still low on PE and high on dividend.

Check my previous posts and try to find out some stocks you like.

Buy on the opening is not a good idea, and it's not a good idea to buy today as well. I think this rally may have a big correction soon, when could be a chance.

Although it could be the time for the US government to solve the problem by entirely take the future bank loss into US national debt, the stock market won't turn to bullish immediately.

To my experience, mid-term bottom has been passed. There could be another final low in the first half next year to remove all confident investors, and then another slow bull market may show its head.

Sept-11 The forseeable future

The data show during the election year, the final two months would be positive in average. It does not mean this year will be positive but it clear shows in the history, green color has better chance to appear.

If the major indices have filled the gaps, I there is a good chance for a end-of-year rally for November of December. Therefore the strategy is very clear: Accumulating stocks in lows of September and October and hold them until 2009. In the bear market, it is always very decent rebound that may take the DOW up more than 1000 points, thus people say making money on the long side would be much easier for traders in bear market than bull market. Steady bull market only gives some space for people play with sector rotation, while the best strategy would be buy-and-hold. Bear market with high volatility is heaven of traders, just like a Chinese idiom: Hero comes from era of chaos.

Sept-04 Recap strategies

In the past year, many people walked away from stock market, and most of them lost money. Usually, here is a choice, either you cut your loss, maybe 50%, say bye to stocks and never come back, in this case, you are winner. The other choice is that you stay and wait for your stock to come back and you will be winner as well. The losers only belong to those who are buying in bull market and selling in bear market time and time again.

I mentioned the my strategy on airliners when OIL hit 120 several months ago. After that the OIL hit 140 and the bubble is broken up. Taking NWA for example, my strategy made me bought this stock 4 times, 100 shares a time at 15.x, 9.x, 7.x and 5.x respectively from Jan to July this year, the average cost on my account is 9.72 for 400 shares so it's making money. My UAUA average performance is worse than NWA but above water anyway. However, ZNH is even worse and I am losing money on it - this indicates you need to diversify your investment within individual sectors.

To have stocks, dollar averaging is better than lump sum purchase, the same thing holds now for H-shares listed in US market as ADRs. After commodity stocks such as SNP PTR ACH in trouble, the telecoms were also bashed in these days, and people said H shares are over, ADRs are over like what they said to airliners half year ago. However, I am buying and asking friend to buy Hong Kong funds, bank notes, and gradually accumulating nice blue chips such as COSCO, China Mobile, which are bashed in recent days. I also own Anshan Steel, Chalco, Mengniu Diary, Alibaba and Bank of China. Let's see what will happen 6-12 month later.