Friday, November 30, 2012

The infallible portfolio?

In this short essay, Ricardo Fenholz of Columbia University makes what seems (to me at least) to be a rather incredible claim: that it's relatively easy to construct a portfolio that is guaranteed to outperform the S&P 500 over one year (or any other interval you like) and also has a limited downside during that year. The idea is the take the S&P 500 Index and tweak it a little, creating a portfolio with less weight in stocks with higher capitalization, and more weight in those with less capitalization, and presto -- you have something guaranteed to outperform the S&P 500, he claims. Is that possible? That easy? Here's a little more detail:
To understand how this works, let’s consider the S&P 500 U.S. stock index. Suppose that we wish to invest some money in S&P 500 stocks for one year. Currently, Apple has a total market capitalization of roughly $500 billion, making it the largest stock in the S&P 500 and equal to approximately 4% of the total capitalization of the entire index. Suppose that we believe it is very unlikely or impossible that either Apple or any other corporation’s capitalization will be equal to more than 99% of the total S&P 500 capitalization for this entire year during which we plan to invest. As long as this turns out to be true, then it is actually pretty simple to construct a portfolio containing S&P 500 stocks that is guaranteed to outperform the S&P 500 index over the course of the year and that has a limited downside relative to this index. In essence, we can construct a portfolio that will never fall below the value of the S&P 500 index by more than, say, 5% and that is guaranteed to achieve a higher value than the S&P 500 index by the end of the year.[1]
This is not a trivial proposition. If we combine a long position in this outperforming portfolio together with a short position in the S&P 500 index, then we have a trading strategy that requires no initial investment, has a limited downside, and is guaranteed to produce positive wealth by the end of the year. According to standard financial theory, this should not be possible.[2] Furthermore, the assumptions that guarantee that our portfolio will outperform the S&P 500 index appear entirely reasonable. After all, not for one day in the more than 50-year history of the S&P 500 has one corporation’s market capitalization come anywhere close to equaling even 50% of the total capitalization of the market. A 99% share of total market capitalization would essentially amount to there being only one corporation in the entire U. S. for an entire year. This seems like neither a likely outcome nor one that investors should take seriously when constructing their portfolios.
What does a portfolio made up of S&P 500 stocks that is guaranteed to outperform the S&P 500 index look like? There are many different ways in which such a portfolio can be constructed, but one feature common to all such portfolios is that relative to the S&P 500 index itself, they place more weight on those stocks with small total market capitalizations and less weight on those stocks with large total market capitalizations. The weight that an index such as the S&P 500 places on each individual stock is equal to the ratio of that stock’s total market capitalization relative to all stocks’ total market capitalizations taken together. In the case of Apple, then, the S&P 500 index would place a weight of roughly 4% in this individual stock while those portfolios that use HFT to outperform this index would instead place a weight of less than 4% in Apple stock.
The only condition for this to work, he suggests, is that the assumption that no stock in the market comes to dominate the market in the sense that its market capitalization comes to be a high fraction of that of the entire market. This is, as he notes, a fairly weak assumption, although the weaker you make the assumption, the longer the time interval over which this idea apparently works.

Now, I'm not doubting the veracity of this claim. I'm just stunned that such a simple recipe could work, and can't see the intuition behind it. What if the high cap stocks happen to perform brilliantly next year, relative to the lower cap stocks? Wouldn't this portfolio with underweighted high cap stocks then underperform the S&P Index? I've had a quick look at the paper Fernholz references as a detailed support of his claim, and there he explains the conditions for the theorem to hold in slightly different terms:
The conditions mandate, roughly, that the largest stock have "strongly negative" rate of growth, resulting in a sufficiently strong repelling drift away from an appropriate boundary; and that all other stocks have "sufficiently high" rates of growth.
That sounds very different from the quite plausible assumption about no market dominance of a single stock. Indeed, this seems like saying that, if one assumes that large cap stocks will perform poorly, and small caps stock better, then we can build a portfolio guaranteed to outperform the S&P 500 Index by weighting small cap stocks more heavily. Isn't that like assuming we know the future?

But maybe I'm wrong. I'd be interested in the thoughts of others. The paper is quite dense and light on intuitive discussion of the logic. Fernholz suggests that perhaps the existence of these superior portfolios -- which require continuous rebalancing by high-frequency buying and selling of many stocks -- explains some of the very high profits consistently earned by quantitative high-frequency hedge funds such as Renaissance Technology's Medallion Fund. I think I find more convincing the analysis of Lo and Khandani which seemed to suggest that much of the performance of quant hedge funds over the past decade or so can be accounted for by fairly vanilla long short equity strategies, with increasing use of leverage in the mid 2000s (used to maintain high reported earnings even as raw earnings fell off due to competition).

Really Cool Songs

Really cool songs are usually not big commercial successes or chart toppers. There has to be something with the melody and/or lyrics that makes it special.

First on my list has to be Lou Reed, his drug laced, brash lyrics and mind numbing bass line and melody make this in a class of its own.

Just to prove that punk bands also can come up with gems, The Stranglers shine here.

How to be sexy, breathy and lyrics that are suggestive but goes nowhere with soaring vocals. Chris Isaak at his best. 

Listen first and see how compact and loud this band is, and there are only 3 of them The highly under rated Rush from Canada with their biggest hit.

The brilliant, enigmatic, in your face performer Annie Lennox ... in all her glory and talent, powerful lyrics to boot.

For all of Pink Floyd's brilliance, this song somehow stays with us for the longest time. Its the title I guess. So cool.

If The Beatles never existed, we'd be talking about The Beach Boys. Not many of us appreciate the musical genius of the band, in particular with Brian Wilson. This song can be broken up into 3 songs, thats how good their composition can be and what about their harmonies.

Roy Orbison, under rated, this song revived in a duet with kd lang only accentuated his musical brilliance and unique voice.

Santana at his best, this song makes love to you at the start, caresses you then brings you to musical orgasm with his riveting solo.

Thursday, November 29, 2012

Will It Hold Wednesday.

The day was according to the plan. All the asset classes are moving in tandem and appear to be in line with the expectation. A quick review of various assets classes are as follows:

Equities: We are coming closer to the cycle top and while my upside target in SPX is 1425, we came pretty close intra-day at 1420. Will that be considered as target met? I have started scaling in short positions with inverse ETFs for indices and will add some more tomorrow. Again, the basic premise here is “Patience” and “Agility”. The correction may or may not start tomorrow. But this was a counter trend bounce which we called well in advance and had a bounce target. Now that we are close to that target, both in terms of price and time, it seems that short trades are high probability trade.  The coming down move most likely will make a lower low than what we had on November 16, enough to create doubt and fear in the minds of the retail investors. That is when the Boyz will buy cheap and pump the prices up again.  As you have seen in yesterdays Dilbert cartoon, someone will create Media frenzy, Banksters will pump or dump the prices and Sheeples will be sheared off.

I am sure that when I will call you guys to go long next month, many of you will hesitate and wait for everything to be OK. And when everything will seem OK, it will be time to sell again. To win this con game, we have to go where the puck is going to be, not where the puck is.

Precious Metals: Silver had a moment of madness and spiked higher but gold was not able to cover the loss of yesterday. I did take a small short position in silver with ZSL with a very tight stop. If Silver closes above $ 35 next week, I will close this trade but for now I expect silver to correct along with equities. How much it will go down I am not sure. The 1st target is a close below $33 and then I will add some more short positions. So right now, there is a range for this trade and I would be monitoring this range for further action. I am not touching gold for now and will wait for all risk assets to bottom before going long again.

Crude:  Crude made a possible double top around $ 88.50 and did not held on to the gain. Like equities, here also the short term cycle has topped or about to top and I do expect further correction in Crude prices. I am short crude with SCO and will add some more tomorrow. Once it closes below $ 86, we can be very sure of the coming correction and the minimum downside price target would be around $75-$77. Let’s wait and see how it plays out. I think this one is a high probability trade.

Coffee:  While coffee seems to have made a bottom, the hourly chart is overbought and we might see some pull back shortly. It is where that pullback ends will give credence to the bottoming of coffee. There is no hurry. From a high of $308.9, coffee had corrected to $ 144 which is more than 50%. So we have lots to cover on the upside and we can afford to wait for a while for confirmation. I just want to draw your attention to this potential winner.

Nat. Gas: Most likely it gave a short term sell signal but I do not think it is going to be anything serious. The biggest oil company in the world, Exxon Mobil is getting in Nat. Gas in a big way and when such a giant starts taking a position, we know the future. I would be looking to add Nat. Gas as a long term play in future.

Bonds: For many months now Bonds are moving in a range. TLT made a high in last July and since then it is just chopping around. As there is no clear direction, I have not touched it. But the long term trend is clear. If you are long bond, it would be better to book profit. The interest rates will start going up starting sometime in the next 3-4 months.  TBT will be the trade of the life time then. But we will have to wait for that trade as the time is not yet ripe for taking any position in Bond. The inverse relationship between Bond and Equity is about to get discarded.

That’s all for tonight. Thank you for sharing my thoughts. Hope you are able to pass on the blog to your friends and join me in twitter (@BBFinanceblog). As I said yesterday, come January, we will have a paid subscription service to selected few with specific trade ideas. I will be emailing at least once a week high probability trades with entry, stop loss and exit points. If you have been reading this blog for a while, you know that I will try to minimize risk and look for high probability trades.  Of course it will be a paid service and I am looking only a selected few. So if you are a serious investor, with investment of minimum $100 K or more, looking to earn decent return on your portfolio consistently without speculation or undue risk, do send an email to: to be included in the mailing list.

Wednesday, November 28, 2012

The Pink Elephant In The Room

You are in a room in a social setting with a few people and there is a pink elephant in the room as well. How long can you carry on before you start talking about the pink elephant? In local financial markets, the pink elephant is the results of the upcoming elections. What if? 

My opinion, for what it is worth, the ruling party mightl win only one state in the Peninsula, I find it very hard to see where the second state is coming from. What about phantom voters and rigged votes? That can only be used in close seats, its pointless to use rigged votes in all seats, and I think there are not enough of such votes to go around town.

Whether its Anwar or the leader from PAS as PM, I don't think thats an issue anymore. PKR may lose some votes on that but miniscule.

Will there be a hung parliament? I think that is the best the ruling party can hope for, a hung parliament. Then its a jockeying of candidates to move to one side or another. Not a good situation. However, I do think in a hung parliament situation, the momentum will favour people moving to PKR rather than the other way around. Because a hung parliament already means, the tide has shifted significantly, and shifting still, ... for politicians with a bit of brains, a sinking ship or a new ship - no contest. 

If the opposition wins convincingly, what will happen to the stock market? I read in the front page of The Star, of all places, the front page!!! Talk about media propaganda. Scare tactics started already. 

First of all, there are three components, one is foreign funds, two local funds, three retail funds. As the election draws closer (say two weeks to elections), retail funds would exit already. Local funds being local funds will stay put, anyway, the big local funds already controlled the indexed stocks.

The key scare tactic is to instil into the public that foreign funds will exit and cause a plunge. Let's look at the size of foreign funds. They make up around 20% of volume. Look at the stock they hold: Public Bank, IOI Corp, KLK, BAT, Guinness, DIGI, IHH .... there are very few that are holding big local indexed GLCs. Ask any genuine head of sales or head of research NOW, they will tell you most of their clients are soooo underweight Malaysia, even though the controlled mainstream media would want you to believe otherwise.

Look at the stocks above, will the fundamentals change significantly for these stocks should there be a change in government???? Thailand changes government every couple of years, see what happened to their civil service and listed companies .... same-same!!! Just because this is going to be our first time, its easier to put up scare tactics cause we have not travelled this path before.

I believe the level of foreign shareholdings in local stocks are low, and they are in "safe counters" anyway. So, the sell down will be minimal. A probable fact that not many realise is that a substantial amount of the so called foreign funds now who are long Malaysian stocks,.... are probably Malaysian owned funds rerouted, no need for me to go into possible details.

A recent report in The Star, UOB KayHian's Vincent Khoo was unconvinced on the local market stating in a report that foreign institutional funds that it had met were mostly underweight on Malaysia and continued to be “wary” of Malaysia's index components' high valuations.

Top Ten Issues That Divide Malaysians according to a survey by Merdeka Centre for Opinion Research

I am not trying to put up a rosy picture should there be a change in government. I am trying to put up a realistic picture. Yes, markets will go down and stay there for a couple of months until there is stability, a proper manifesto and proper execution that things are different. I see index could go to 1,400-1,450 temporarily. But consider this:

- there will be more "real tenders of government projects"
- there will be better utilisation and accountability of our "big revenue items"
- there will still be corruption but hopefully a bit less, but let's give them 5 years la ... we gave 50 to someone, we cannot give them 5???

We so badly need a two party system in our country for the democratisation process to make any headway.

The "How On Earth" Factor.

How many of you were tempted to short or did actually short the market in the morning. It was as if the bottom was about to fall off. Exactly the stuff I wrote yesterday. Did you feel that you are going to miss out? If you did, you are not alone because I myself felt like that and that despite my own writing that such a thing is going to happen. So I just walked away from the trading desk for an hour.

Now all the talking heads, media of all kinds and of course ZH is attributing the rally to Mr. Boehner. But Mr. Speaker sure did not read my blog post of yesterday. Nor did I know that he would speak today or whatever he would say.  Someone has asked over email which chart / indicator predicted the sell off and subsequent rally. The answer is: there is no Technical Indicator which will tell you that there will be sell off tomorrow morning and bounce in the afternoon. It is much more complex than that and much more intuitive. At least it has helped some of you folks to stay out of harm’s way and I am glad for that.

So where do we go from here? My reading is that the bounce will continue tomorrow and tomorrow most likely would be a good time to start scaling in some short positions. My personal favourite is Crude. I am still debating about Silver. I am not sure if it will correct and how much. But Russell 2000 looks a good candidate and so does Facebook.  However please do your own due diligence and have proper stop loss in place for any trade you take. And please do remember, the market is not going to tank whatever ZH may say.

People who know the inner working of the Washington DC have started buying already. But they will want retail to sell out and drive the price down some more, so that they can buy cheap. I would suggest that you start preparing your buy list along with your Christmas present list. Consider this advice my Christmas gift! I am not saying that we buy now. I am saying that we should be ready so that when there is some fear in the market and things look bad, be ready to pick up the bargains.

Few days back I brought your attention to Coffee and identified JO as the vehicle of choice. Today JO gave the largest bullish wick in months from its long term support line. I will be scaling in JO on the long side of the trade with a tight stop loss.

My sabbatical will end in December and from next year I will be back to what I do for living. Crunch number. The blog posts will be irregular but we still have a month or so. Those of you who think that I can add value to your investment and trading, please email to be included in a select list. I will be sending personalized email to this group highlighting trading / investment opportunities every week. If you have been reading this blog for a while, you know that I will try to minimize risk and look for high probability trades.  Of course it will be a paid service and I am looking only a selected few. It will cost less than a daily cup of Starbucks' Cafe’ Mocha.

But those are plans for next year. Let us make some money with free advice this year and we will take from there. Thanks for sharing my thoughts and hopefully you will also share it with your friends. Stay frosty folks. 

If Don't Quit, Also Must Cut Down At Least

Tuesday, November 27, 2012

Why Bruce Lee

Because he is the triumph of mind over body...  because he is faster than the rest of us .... because he is cocky and cool and he can afford to be .... because he is human and yet superhuman at the same time ... because he is just like us with faults and all and yet he is a higher being ... because he brought us beauty in movements and reflexes ... because he can be the most intense person in the room and his focus can be soul-penetrating ... because he showed us the extent of human potential ...

Below is a  FOOTAGE of Bruce Lee playing ping pong with normal humans. My God, the focus, the assuredness, the skill, being one with your instrument, mind blowing ... but is it real ... it even looked real ...

Sigh ... and we all wanted it to be true and real .... but Bruce Lee is still Bruce Lee no matter what

Bruce Lee Plays Ping Pong With Nunchucks — The Truth Revealed!

by: Garr Ovard    Profile     Share: bruce lee plays ping pong
Thursday, December 22, 2011

Bruce Lee (left) completing a roundhouse kick as he pelts a ping pong ball into oblivion with his nunchucks. Photo: Still from video. All copyrights belong to their respective owners.

First of all, you may be wondering what an article about Bruce Lee playing ping pong with nunchucks is doing on a kids books site. There are 2 reasons. One, what kid wouldn’t love to see a video of Bruce Lee playing ping pong with nunchucks? Two, I wrote this article long before I re-branded my site to focus on kids books, and I didn’t want to disappoint all of my readers who have linked to this page. Now for the fun stuff…

I seriously thought I’d seen it all. Then a friend of mine shared this video on Facebook. Seriously, nunchucks? If you’ve never seen Bruce Lee then you need to watch this video right now. If you have seen Bruce Lee then you’ll probably laugh and shake your head as you watch him effortlessly whack ping pong balls with nunchucks — not to mention the fact that his TWO opponents are freakishly good at ping pong. Amazing.

Now that you’ve been blown away I can tell you part of the truth. This video is a promotional video made to promote the Nokia N96 Bruce Lee edition phone, a $1,290 mobile device — approximately 8,788 Chinese yuan — available only in Hong Kong and China. Apparently it’s been a very successful viral campaign.

Nokia N96 Bruce Lee Edition Mobile Phone
Nokia N96 Bruce Lee Edition Mobile Phone. Photo

Bruce Lee Mobile Phone Accessories
Bruce Lee Mobile Phone Accessories. Photo

Countless blogs and Websites, including the official Nokia blog, are trying to figure out if this is an actual video of Bruce Lee. But all the author of the post on the official Nokia blog has to say is “Oh, and, the speculation since this was released has been rife as to whether or not the video is real, faked using CGI or faked using a Bruce Lee impersonator. We don’t know either, but we’ll endeavor to find out.”

Is it Bruce or not? Some Bruce Lee fans swear this is not Bruce Lee because his body proportions are not correct and he didn’t do his famous 1 inch punch. Others say it’s definitely the “Little Dragon” and that Nokia inserted digital footage of the master himself into the video. There’s even a “Making of the Bruce Lee Ping Pong” video on YouTube that disappoints. It shows nothing of the making of the video but commentary from a random actor who says inserting Bruce Lee into campaigns like this only adds to his legacy. As of this writing there is nothing on except debate.

So what is one to do when even the source is shrouded in secrecy? I decided to do what I hadn’t seen anyone else do.

First I used Google to translate “Bruce Lee” into simplified Chinese.

Bruce Lee in simplified Chinese = 李小龙

Next, armed with modern linguistic translation power I went to the Chinese Nokia Website (via Google’s translator) and entered the Chinese characters into the the search bar. Nothing. However, searching for “N96” in English produced the non-Bruce Lee phone product page, which did not translate very well since most of the characters were graphics.

Since the official Nokia bloggers wouldn’t fess up, the original Flash site is now nothing but a junk site, and the Internet Wayback machine offered nothing but blank screens, I had no choice but to find the agency that created the viral in the first place. Why hadn’t I thought of that before? It seemed like such an obvious solution.


Created by JWT Beijing, the Bruce Lee Ping Pong viral ad was an instant success. After only 24 hours the 10 second teaser had generated 700,000 views. 2 days later the full spot ran with a product shot and URL directing people to a microsite where they could order the limited edition phone.

In this interview with Agency.Asia, Chief Creative Officer, Polly Chu, gracefully dodges Agency.Asia’s attempt to elicit information as to whether the ad was fake. But she finally had this to say:

“Yes, we discussed with the director how to make it look like a never-seen-before secret footage of Bruce Lee. The director took a great effort to study Bruce Lee and found the right talent. We used an up and coming local Chinese director whose passion could be seen in every second of the film.”

So now you’ve heard it straight from the Chief Creative Officer. They were trying to make it look like something it wasn’t; and, after studying Bruce Lee, they found the “right talent”.

Clearly this is a brilliant example of viral creative — interesting enough to spread like wildfire and controversial enough to stir passionate debate among its viewers.

Well done JWT Beijing.

Today's Watchword: "Patience".

For those of you itching to short, some more patience is needed. Tomorrow the market will tease you with some more selling and you will be tempted to short. You will think, gosh, I am going to miss the opportunity. That “Fear of missing out” will come in play. Only thing I can say is: have patience. The cycles for risk assets are up for few more days. It does not mean that market will go up and up. It just means that although we may see some more selling tomorrow, we better wait for the cycle to top before we short, least we fall for a bear trap.

While I expect one more round of selling starting December, I am not sure of the magnitude of selling. May be it will continue for the whole month of December but if some sort of kicking the can down the road game is played by the politicians, the selling may not be very deep either. So it is a fluid situation after all and while the only trade is a short trade for now, let us be ready to get out of the water very quickly. For, only the direction is certain and not the level of up or down move.

As I keep repeating, the world and USA is not going to end tomorrow. ( It will end little later) While we have some nice opportunities on the short side we are also going to have some great opportunities on the long side as well and those opportunities are coming up much quicker than you can imagine. And if you have not noticed already, for the retail investors, it is easier to make money on the long side than on the short side. 
PM sector, particularly gold is not showing the strength and is nowhere near $1780, its earlier high for this year. That makes me think that may be one more correction is due for gold along with other risk assets. But I do not want to short gold and as of now waiting in the sideline to go long.

The situation in Europe is not all that bad as the MSM and ZH would have us believe. In long run, may be in next 18 months or so, Euro will split up and there will be two Euro. A Northern Euro consisting of the strong economies and a Southern Euro of the PIIGS led by France. And it may sound a bit far-fetched  (Like the Apple $ 500 call) that Northern Euro will become the reserve currency of the world. But that is still some months away. Till that time, USA will be able to print as much as it want and still keep the bond yield at ridiculously low level. They are talking of reducing $ 1 trillion over 10 years, when the deficit is over $ 16 trillion not considering un- funded liabilities. It’s a joke and sooner we realize the joke, better for us.

The other side of the joke is that everyone is MSM and all talking heads are going ga ga over the bounce in housing and now everyone wants to join the gravy train. Particularly all Pundits are talking about home-builders like LEN and TOLL. I think this trade is now overcrowded and better avoided. Sorry guys, you are late in the party and it is better to give it a miss. In any case I do not believe that Housing has bottomed and we will revisit this subject after six months.

Some of the readers may be getting confused as to what are my views of the economy. Is it improving or going to hell in hand basket. I tell you what. From your investment and trading point of view, it does not matter what you believe. All it matters as how your portfolio is performing. While I do not believe that the end is upon us tomorrow, I also do not believe that we are any better off than we were four years ago.  But in the mean time the Fed has flooded the market with crisp notes and we would be fool not to take the advantage. The whole system is rigged and we are mere pawns. But let us not trade with our belief.

That’s all for this evening. Thanks for sharing my thoughts. Please remember the Amazon link.

Determination and Focus

The strength of the human spirit always confounds me. Determination and focus. Its not that we can do all things, but we certainly can do most things we put our minds to. Naturally people will say "well, I really really want to be rich", can I do that? I don't think that will happen to everyone even if you have the best teacher or motivational coaches, but at least you would have gave it your best shot. Isn't that most important ... that you have aimed for the stars, pulled back an arrow the best you can and gave it your best shot ... rather than wishing upon a star and slumping back to your regular humdrum activity.

This guy's a champ.  .... Just do it ... you'd be amazed at what you can achieve.

Monday, November 26, 2012

Dog Imitates Baby ... Too Cute

Tale of two Indices.

It’s a tale of SPX and NDX. When the correction started 70 moons back from a high of 1470, SPX came down to 1344. 126 points or 8.6% . Not really earth shaking but OK.  NDX came down from 2880 to 2494 i.e. 386 points or 13.4%. Tech. stocks were lower across the board lead by Apple which dropped almost 25% from peak to trough.   

Now while the bounce is in progress, SPX has retraced about 50% while NDX has retraced little above 38.2%. I expect SPX to retrace up to 61.8% which is around 1420 +/- few points. Will NDX also retrace 61.8%? 61.8 retracement levels in NDX is around 2730. If so then NDX still has another 80 points to run.  It is not guaranteed but with cycles up for few more days anything can happen. The point here, if you are thinking of shorting the indices, better wait for few more days and if you are thinking of taking a day trade, NDX is a better option than SPX.

What is worth noting, since September 14, SPX has lost about 60 points and unless we are very nimble trader, watching the market move every moment of the day, did we lose much by staying in the sideline? Well, we did not exactly stay in the sideline; we dabbled in Nat. Gas for a nifty profit and now waiting for other opportunities. We may get another chance of shorting and this time many parameters are lining up. While shorting, we have to be very quick to grab and run because this is not going to be the end of the world that many are waiting for.

The USD index continues to behave as expected but apart from NDX other risk assets are not showing much vigor. At the point of writing Euro has broken up and has touched 1.30 and yet Crude is languishing and hardly any movement from Gold and Silver.  May be they will also break to the upside but so far that has not happened.

Last week I closed most of my Nat. Gas position and thank my lucky starts that I did. It is always better to be lucky than smart. Nat. Gas corrected almost 4.5% today. So far it seems that $3.70 is the support and that held. The longer term price target is much higher but nothing goes up or down in a straight line.

 Coming back to the Euro, the irrational exuberance is being attributed to the  successful completion of the Greek Aid. Gosh, how long to listen to the same story and how come the market reacts the same way every time. I cannot attribute any logic or reason except that short term cycle of risk assets are up for the week.  So maybe we should just ignore all noise and stop looking for reasons and logic and just accept it as they are.

Among many stories and news that I read during the day the one that touched me is the following : Supermarket Owner Gives Away Stores to his 400 Employees: God bless him and his family.

Before hitting the “Publish” button, here is a contrarian short idea.

(H/T Schaffer’s Market research)

If shorting crude is going to be a good trade, may be this one goes hand in hand with that trade. Please send your feedback and ideas as to how best to short Oil Services.

Thanks for your support and help and for reading the blog. 

Saturday, November 24, 2012

Significant Upgrades To Murasaki System

We have had some teething problem early on as we did not expect more than 1,000 trial users would jam our system in the first week. As promised, effective IMMEDIATELY, the load and response time would be cut down from the usual 4-10 seconds per click to less than 2 seconds.

How - Instead of loading over 1,000 stocks ... when you use Murasaki ts on your PC/desktop/notebook, by default it will load just the TOP 300 stocks sorted by M Index (Murasaki Index) and BRH Index, the two most used indicators. We call this the LITE VERSION.  You can switch back to view ALL STOCKS by using the drop down menu on the right of your screen.

Further queries, please contact us on: 1800 88 3788

We are very excited when we tested the new version on our IPADs, IPhones and other smartphones (including Samsung). The load times were even faster. But bear in mind that owing to the size of the gadgets, we have to trim down the number of stocks that you can view.

IPAD/Tablet users - When you use Murasaki ts, you will see just the TOP 100 stocks ranked by M Index and BRH Index. Somewhat less than the 300 on PC/notebook, but its still going to be more than sufficient. Please note that you WILL NOT be able to load ALL STOCKS on IPADs or tablets.

Smartphone Users - Owing to the technical specifications and limitations, when you use Smartphones, the system will load only the TOP 50 stocks  by M Index and BRH Index. Though not entirely ideal, its the next best thing when you are on the go.

Please use CHROME or SAFARI browser.

Smartphone Layout (Chrome)

Smartphone Layout (Mozilla Firefox)

Final note, all subscribers may ONLY sign into one device/gadget at one time, so please remember to log out of one device before signing onto another.

- How To Stop A Nightmare - Too Lovely & Warm For Words

A Must Read Interview

If you want to make a sense of all the economic data and find out where the country is going without all the BullS**t coming out of doom and gloom camp please read the following interview:

Have a great week end folks.

Friday, November 23, 2012

Singapore Water Industry, Thanks To You Know Who

Saturday, 10 November 2012 06:34

S'pore - thanks to Malaysia's Dr M, our water industry is now worth $ 9 BILLION!

Written by  mevotex
Fresh water has always been a precious resource to Singapore. Being a tiny island with high urban population constrained by its land size, modern Singapore never have enough water of its own to support its population, but this is about to change....
In 1927, Singapore signed a water agreement with Johor to construct a pipeline transporting raw water from Johor to Singapore. During the Battle of Singapore in 1942, the pipeline was destroyed, which left Singapore with water reserves that could last at most two weeks. According to Lee Kuan Yew, this was one of his motives to envision water self-sufficiency for Singapore later when he became the city-state's Prime Minister.
Immediately after the British awarded self-governance in 1959, the Singaporean government under Lee signed 2 water agreements with Malaya in 1961 and 1962. Under these agreements, Singapore will build two water treatment plants in Singapore and a new, expanded pipeline from Johor at its expenses. Singapore will also supply treated water to Johor at far below the cost of treating the water, and in return, Malaya would also supply raw water to Singapore below market prices. The agreements would last till 2011 and 2061 respectively.
In 1965, when Singapore was expelled from the Malaysian Federation, it received the first water threat from then Malaysian Prime Minister Tunku Abdul Rahman, who said that "if Singapore’s foreign policy is prejudicial to Malaysia’s interests, we could always bring pressure to bear on them by threatening to turn off the water in Johor".
Mahathir tried to take advantage
In response, Singapore began to construct more water schemes on the island throughout the 1970s. This include the damming of river estuaries to allow for greater storage volumes, which resulted in larger artificial reservoirs that collect water from carefully managed catchment areas. These reservoirs would later be responsible for 20% of Singapore's water needs in 2012.
But as Singapore began to rapidly industrialize, the amount became insufficient. Thus in 1982 the city-state was interested to build a dam on the Johor River in Malaysia and an associated new water treatment plant there, with the construction costs all paid by Singapore, in exchange, Malaysia was to allow Singapore to purchase more than the 250 million gallons of water per day as negotiated in the 1962 agreement.
Malaysia's Prime Minister Mahathir Mohammad however, decided to make it difficult for Singapore. After six years of difficult negotiations, the 2 countries finally signed the agreement that allowed the construction of the dam. It was a heavy price for Singapore, who agreed to pay RM320 million as compensation for the permanent loss of use of the land and its associated revenue, a premium of RM18,000 per hectare of land, and an annual rent of RM30 for every 1,000 square foot of the land. The cost of building and maintaining the dam would be borne by Singapore, and upon the expiration of water deals, both the dam and the treatment plant are to be returned to Malaysia.
Mahathir believed that Singapore couldn't survive without Malaysia's water
Emboldened by this victory, Mahathir mistakenly believed that he had caught Singapore's main weakness. In 2000, attempts to re-negotiate with Malaysia to secure water supply beyond 2061 failed, and in 2003, Malaysia again warned Singapore that once the first treaty expired in 2011, the water prices would be raised by 200 times from 3 sen per 1,000 gallons to RM6.25. The government of Singapore decided that, instead of paying a higher price and continue its water dependence on Johor, it will go all-out to achieve water-sufficiency.
But Kuan Yew said NO!
The first thing Singapore did was to invest heavily in water technologies and gathered the world's most renowned water management scientists into the island. Academics, researchers, scientists and experts from across the globe were invited to Singapore to help it devise a water solution. Desalination and recycled water were identified. Utilizing advanced technologies, Singapore proceed to construct one of the world's largest desalination plant in 2005, now accounted for 10% of the country's water needs. Singapore's second plant, even bigger, is scheduled to complete in 2013, providing another 10%.
Desalination removes salt and other minerals from sea, turning sea water into fresh water. There is almost no controversy on this. The issues come when dealing with recycled water. By that it means waste water, including those from toilets and drains, is to be purified back for use. The concerns lay on whether all harmful materials, pathogens or micro-organisms could be effectively removed.
Lee Kuan Yew Water Prize was established to award $300,000 for scientists of any nationalities who made breakthrough in water treatment technologies and brought them to Singapore. In 2003, Singapore started its first wastewater recycling plant. Under constant advices and supervision from scientists and researchers, by 2012, the country's 5 wastewater plants successfully marketed themselves and provide enough clean water to meet 30% of the island's needs.
‘Public acceptance is not guaranteed at the start. Recycled water has been rejected in Australia, where people term it ‘yuck’ water,’ said Dr Eduardo Araral, assistant dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. ‘Singaporeans accepted it both because they are pragmatic and because they trust the Government’s promise that it is safe to drink,’ he added.
In 2006, Singapore identified the commercial value of water and environmental technologies, especially to water-scarce Middle East, North Africa and various First World nations, and also countries who currently lack proper and effective water treatment system. The government invested an initial $330 million to promote the new industry and to make Singapore a potential global hub for water research and development. Since 2008, the city-state hosts the Singapore International Water Week, a key event for the global water industry, every year.
Water sufficiency to exceed 70%
Over the years, Singapore has turned what used to be a scarcity into its strength and now the water industry is seen as a new growth sector for the country. The government's commitment to industrial promotion, easy access to research funds, and readily available talents, help built up a new robust water industries in Singapore amid the European financial crisis.
Kow Juan Tiang, group director for Environment & Infrastructure Solutions at IE Singapore, said: “If you look at the water industries in Singapore, it encompasses companies from many countries. Our financial sector worked closely with those companies venturing overseas here for projects to secure technology, solution, and most importantly, money financing, at a competitive advantage compared to otherwise in (crisis-laden) Europe.”
Goh Chee Kiong, director of Cleantech Building & Infrastructure Solutions at Economic Development Board, said: “What is helping this sector is the fact that Singapore has a vibrant manufacturing industry comprising chemicals, pharmaceuticals, semiconductor, oil and gas, and they are becoming prove points and demonstration sites for water companies to utilize their technology in Singapore before scaling up to the rest of the world.”
The push to develop the industry has drawn attention from some of the world's largest companies like General Electric and Siemens, who invested and created local water companies such as Hyflux that have expanded overseas. "What they are looking to do is create a virtual market for the water business which is much larger than Singapore," said Mr Glen Daigger, chief technology officer of CH2M Hill, an US-based industry consulting firm. "Singapore's ambition to become a water technologies hub in Asia is now a step closer."
With technology as the key driver, the water industries in Singapore experienced strong growth. In just five years, Singapore was propelled from a water-challenged nation to an internationally-recognised name in the global water community - with its water industry blossomed to over 100 companies. The city-state successfully built up a vibrant water industry cluster, with operations which span the value chain, including R&D centres, equipment suppliers, system integrators and EPC firms, project developers and financing organizations.
In 2011, Singapore's water sufficiency rose to 60%. At the same time the 1961 water agreement with Malaysia expired. Singapore informed Johor it would not be renewing the agreement. The next focus would be on total self-sufficiency before 2061, the date when the second agreement lapsed.
Singapore's water sufficiency to top 70% next year, on track for self-sufficient in 2061

Market Gives Thanksgiving Gifts.

Hope you all had a great ThanksGiving. Today the half day session presented quite a nice Turkey, deep fried Texas style. Only folks complaining were Zerohedge who found many reasons why this is a fake rally. Most likely they do not read this blog otherwise they would have known that we have called for this bounce weeks back. We can also tell them that this bounce will continue for better part of next week. It does not mean we are long. But we can save them lots of heartache and agro.

Those of you who lost tons of money since 2009 getting caught up in bear talk and that imminent collapse here is one blog you must read everyday just to re-wire the brain.

Bill was 1st to start financial blogging before doom and gloom blog became fashionable and he identified the collapse of the financial system in 2007. He is a genuine person who is not into ranting and always gives facts to justify his position. His website is hosted here in America and he does not get money from anybody to create negative propaganda. This one is a must read for those of you who have been brain-wasted by Voldemort.

Anyway, the half day session saw all risk assets rip higher. Gold and silver had a nice jump and most likely the trade suggested by Stock Trader’s Almanac is going to be winner 13 year in a row. But if you also remember, the exit date of that trade is around December 2-4. So if you are long PM as a trade, remember to take profit. Crude however is moving in the range. But the most important thing which I thought worth mentioning today is the dollar index.

US$ Index dived almost 1% which is a big move in one day and no wonder PMs are jumping higher. But crude has not been able to close higher when USD is at a low, it does not bode well for crude in future. This chart of crude is from Lance Roberts.

I had written before that Crude may bounce upto $ 91-92 and this chart supports my calculation. Should Crude reach that level and Dollar Index reach 79.50 in the next 3 or 4 trading sessions, it will set up a nice short entry.

Nat.Gas reached close to my up-side projection and I had closed half my position. Most likely I will look for getting out of the rest by next week. I expect Nat.Gas to go up $ 6 but in short term, it has gone up almost 50% in 6 months and is time for some pull back. It may not happen but why take the risk.

Equities most likely will see some pull back on Monday before one final push up. The sell set up will kick in around 1425-30 or November 29th, whichever comes 1st. And this time I plan to go short with some leveraged ETFs.

In my last post I wrote about coffee. I think it is bottoming and look for the confirmation as highlighted by our dear reader in the last post. This has to be a long term trade and have your stop loss according to your risk tolerance level.

So you see, we have lots of opportunities coming up next week.  Santa is giving you advance gifts and I hope you will be nimble enough to grab them. I cannot directly tell you what trade to take. I can only say what I have done. So join me in Tweeter because I will tweet as I take a trade. Also please share the blog with your friends who may benefit from it.

Enjoy your long weekend and have fun. Thanks for your donations and supports. The blog now has a link for a job board and I hope it will be useful to some of you. Looking for your feedbacks and questions.

Thursday, November 22, 2012

Murasaki Coming To Ipoh, JB, Seremban and Melaka ...

EventsDateDayTimeVenueRegister Now!
Master Class
27th November 2012Tuesday12:30 pmStarbucks Coffee, Tropicana City Mall Petaling Jaya1800 88 3788
Master Class
29th November 2012Thursday12:00 pmGloria Jeans Coffees, Kenanga International Building Jalan Sultan Ismail1800 88 3788
Master Class
29th November 2012Thursday1:30 pmGloria Jeans Coffees, Kenanga International Building Jalan Sultan Ismail1800 88 3788

EventsDateDayTimeVenueRegister Now!
Master Class
28th November 2012Wednesday12:30 pmStarbucks AEON Tebrau City Shopping Centre1800 88 3788
Master Class
28th November 2012Wednesday2:30 pmStarbucks AEON Tebrau City Shopping Centre1800 88 3788
EventsDateDayTimeVenueRegister Now!
Master Class
1st December 2012Saturday11:00 amStarbucks Dataran Pahlawan Melaka Megamall1800 88 3788
EventsDateDayTimeVenueRegister Now!
Master Class
1st December 2012Saturday3.00 pmStarbucks JUSCO Seremban 21800 88 3788
EventsDateDayTimeVenueRegister Now!
Master Class
24th November 2012Saturday12:30 pmIndulgence Restaurant, 14 Jalan Raja DiHilir, Ipoh1800 88 3788
Master Class
24th November 2012Saturday2:00 pmIndulgence Restaurant, 14 Jalan Raja DiHilir, Ipoh1800 88 3788