Here it is, as promised a couple of weeks ago though it seems eons ago to me..they didnt tell me how tertiary life could be so hectic and all..read a very interesting article about the difference between top students and the Average Joe..urhh..digressing again!
Expectation plays a critical role in the financial world supporting your basic fundamentals with number crunching...even in my Economic class, i learned that the E subscript e, i.e. expectations, play a key mathematical role by being part of the equation for the determing the currency exchange..you may go..'Hey, so expectations play a part in my FX trades!' well, yah it is everywhere not only in the financial markets. Including your parents, external family members', friends, professors' Great Expectations of you...tell me about it!
So basically, the jizz of it all is such that if the market expect stock A's revenue to increase by 5% while the actual results is 8%, the share price would appreciate. On the other hand, if the posted revenue increased by only 2%, the share price would fall. In restropect, if the market expects stock B's revenue to decrease by 10% while the actual decrease was only 4%, the share price would increase. As such, if you are gonna tell me that if the revenue actually decrease by more than 10% the share price would drop you basically got the hang of it!
Market sentiments is very important esp with regards to expectations. As long as humans exist, there will exist -- the herd mentality.
Sunday, March 11, 2007
Friday, March 9, 2007
Market Crash
ahhh...well, finally here am i back to blogspot. okay, i admit i am an IT idiot just in case you were wondering where i have been after coming with a post that says the correction will not be anywhere soon and BOOM! the market crashes on the 27th and 28th of February
I was trying to log in all these while, thinking i am under the old blogger sign-in and trying to rem my username and password. darn! the username was correct but the password wasnt.. however i remembered my password to be ABCDEFG..try as i may, i was wondering why the emails that i requested to be sent to my email account wasnt received..I sms-ed my 'brother' and he was lost..so was i..lost in the secrecy of many usernames and accounts. never in the world did i realise that the username is ur password!?!? goSh!
Alright..so here i am..finally logged in after a 2week desperation attempt at my 1st blog account..
i had actually wanted to log in the next day to write more where i left off -- expectations. Since there was a global equity crisis, or the correction, we shall now examine the issue.
As you all know, the global 'crash' began with a 9% drop in China, followed by a 400+ point drop in the DowJones. Then began the domino effect where almost every market in the world was equally affected. Indexes around the world dropped and there you go! weak in the knees.
Many believed the catalyst was to our dear Mr Greenspan mentioned the 'R' word..To top it off, it is 'highly prossible but not probable' to put it in his words. And the lastest development is that is now 1/3 likely that the US may face a recession. that figure converts to a numerical 66.67%. Now, Mr G is usually humble and doesnt blurt out unnecessary info..besides, you he is a numbers person which means all the more we gotta tread carefully in the weeks ahead and months to come.
CNY festivities seemed to have put everyone in a bouyant mood last week while this week the dreaded correction has cast a cloud of gloom over most ppl (who invested that is) & seeing everyone counting their losses does have its effect. After all almost everyone you know is affected and greeting revolve around another cycle about bitching about the US, Iran, Shanghai and Greenspan. Its almost depressive. With the effect extending towards other things.
A few others i know also took the opportunity to buy in during the dip. There's where you make money. Buy low, Sell high ( i am sure you have heard this zillion times over). This rebound...is it sustainable? It seems to be a good tiding amidst a sea of confusion..but i am in a dilemma.
why so? here goes...
1. buy in dips. true, the market has rebounded back but it could be set for a greater correction at 30% off to about 2300 points in the STI. risky isnt it?
2. use the wait-and-see strategy (so called the best strategy right now). If things are rougher, time to buy. If not, miss the opportunity, when we could, to buy it cheap during the dip. Obviously, we have to pay more as the bull continues to run...
sighss....
ah well...back to my project
I was trying to log in all these while, thinking i am under the old blogger sign-in and trying to rem my username and password. darn! the username was correct but the password wasnt.. however i remembered my password to be ABCDEFG..try as i may, i was wondering why the emails that i requested to be sent to my email account wasnt received..I sms-ed my 'brother' and he was lost..so was i..lost in the secrecy of many usernames and accounts. never in the world did i realise that the username is ur password!?!? goSh!
Alright..so here i am..finally logged in after a 2week desperation attempt at my 1st blog account..
i had actually wanted to log in the next day to write more where i left off -- expectations. Since there was a global equity crisis, or the correction, we shall now examine the issue.
As you all know, the global 'crash' began with a 9% drop in China, followed by a 400+ point drop in the DowJones. Then began the domino effect where almost every market in the world was equally affected. Indexes around the world dropped and there you go! weak in the knees.
Many believed the catalyst was to our dear Mr Greenspan mentioned the 'R' word..To top it off, it is 'highly prossible but not probable' to put it in his words. And the lastest development is that is now 1/3 likely that the US may face a recession. that figure converts to a numerical 66.67%. Now, Mr G is usually humble and doesnt blurt out unnecessary info..besides, you he is a numbers person which means all the more we gotta tread carefully in the weeks ahead and months to come.
CNY festivities seemed to have put everyone in a bouyant mood last week while this week the dreaded correction has cast a cloud of gloom over most ppl (who invested that is) & seeing everyone counting their losses does have its effect. After all almost everyone you know is affected and greeting revolve around another cycle about bitching about the US, Iran, Shanghai and Greenspan. Its almost depressive. With the effect extending towards other things.
A few others i know also took the opportunity to buy in during the dip. There's where you make money. Buy low, Sell high ( i am sure you have heard this zillion times over). This rebound...is it sustainable? It seems to be a good tiding amidst a sea of confusion..but i am in a dilemma.
why so? here goes...
1. buy in dips. true, the market has rebounded back but it could be set for a greater correction at 30% off to about 2300 points in the STI. risky isnt it?
2. use the wait-and-see strategy (so called the best strategy right now). If things are rougher, time to buy. If not, miss the opportunity, when we could, to buy it cheap during the dip. Obviously, we have to pay more as the bull continues to run...
sighss....
ah well...back to my project
Friday, February 23, 2007
STI hits new high
Do you feel the fear?
Well, the answer is quite obvious with the STI hitting a new high today cruising past the 3300 mark. A couple of brokerage houses and analysts have predicted a few months ago of a correction sometime after the CNY due to profit-taking off the table.
A number of my fellow analysts felt the market is over-bought and they are waiting for 'that' correction before taking any actions. Friends of friends have cut down their holdings with profit-taking amist the pare-down. However, the correction that many have been waiting for will not occur anytime soon. Why so?
First off, my question to you would be: What would substantiate a correction? Are the prices relatively high to earnings? Certainly not for the STI index. Within firms, maybe a couple, but the overall market indicates a strong no. Many companies who have reported for the full year or quarterly earnings have posted strong growth with an average of 10-25%, depending on which sector they are in. Thus, the robust economy is certainly not a case for correction to set in.
We should expect to see the index sailing past the 4000 mark within the year with expectations of investors going strong and the growth figures -- in revenue and profits, surpassing these expectations. What could possibility sustain the current growth that we are enjoying? The answer could simply be what everyone has been chasing after -- Asia's age of discovery, in particular the twin growth, China and India. A phenomenon that could last 20years down the road akin to that of the America Dream story.
However, with high expectations comes greater responsibility on our part as we have to be more alert. For the next result reporting quarter, any actual figures that are below the expectations would see a drop in the prices. These earnings are affected by the relative performance of the economy. Therefore, the stock market becomes a leading indicator of how well the economy is faring. In a buoyant economy like this, all boats rises.
With a robust economy, the one critical factor in deciding which boat rise or sink -- expectations.
Well, the answer is quite obvious with the STI hitting a new high today cruising past the 3300 mark. A couple of brokerage houses and analysts have predicted a few months ago of a correction sometime after the CNY due to profit-taking off the table.
A number of my fellow analysts felt the market is over-bought and they are waiting for 'that' correction before taking any actions. Friends of friends have cut down their holdings with profit-taking amist the pare-down. However, the correction that many have been waiting for will not occur anytime soon. Why so?
First off, my question to you would be: What would substantiate a correction? Are the prices relatively high to earnings? Certainly not for the STI index. Within firms, maybe a couple, but the overall market indicates a strong no. Many companies who have reported for the full year or quarterly earnings have posted strong growth with an average of 10-25%, depending on which sector they are in. Thus, the robust economy is certainly not a case for correction to set in.
We should expect to see the index sailing past the 4000 mark within the year with expectations of investors going strong and the growth figures -- in revenue and profits, surpassing these expectations. What could possibility sustain the current growth that we are enjoying? The answer could simply be what everyone has been chasing after -- Asia's age of discovery, in particular the twin growth, China and India. A phenomenon that could last 20years down the road akin to that of the America Dream story.
However, with high expectations comes greater responsibility on our part as we have to be more alert. For the next result reporting quarter, any actual figures that are below the expectations would see a drop in the prices. These earnings are affected by the relative performance of the economy. Therefore, the stock market becomes a leading indicator of how well the economy is faring. In a buoyant economy like this, all boats rises.
With a robust economy, the one critical factor in deciding which boat rise or sink -- expectations.
Thursday, February 22, 2007
a brief intro...
coming from a lower-middle family (by the way it seems the word 'middle' has been of a topic these days due to Budget2007; or should it be upper-low family for me then? heh. ), it has always been part of my goal to break out of the poverty cycle. how should i go about it?
through interactions and readings, there seems 2 probabilities: 1. start your own company; 2. investments.
i began to read books on finance, did a couple of finance modules, visit the SGX website, read the straits times esp. the back of it, and then advise on my parents on investing from what i learned.
It has been said that students can't or shouldn't invest as they dont have the right education much less the capabilities. Contrary to this belief held by the older generations, the best time to invest is when we are students. Besides the principle of compounding, we should start off young, esp in our student heydays because we have the ability to access the different knowledge 'vehicles', the books, the internet financial porters, the hardcopies of the annual reports available in the libraries. In addition, we are at the age where we have 'matured' and hunger for new and more knowledge coupled with the drive and youth on our side.
With much readings and practices, the transition from paper trading to real-time investing wouldn't be without a hitch but we make wiser decisions with the analysis that is backed by real knowledge of financial figures and qualitative reasonings.
And that brings me to where i am --- investing
through interactions and readings, there seems 2 probabilities: 1. start your own company; 2. investments.
i began to read books on finance, did a couple of finance modules, visit the SGX website, read the straits times esp. the back of it, and then advise on my parents on investing from what i learned.
It has been said that students can't or shouldn't invest as they dont have the right education much less the capabilities. Contrary to this belief held by the older generations, the best time to invest is when we are students. Besides the principle of compounding, we should start off young, esp in our student heydays because we have the ability to access the different knowledge 'vehicles', the books, the internet financial porters, the hardcopies of the annual reports available in the libraries. In addition, we are at the age where we have 'matured' and hunger for new and more knowledge coupled with the drive and youth on our side.
With much readings and practices, the transition from paper trading to real-time investing wouldn't be without a hitch but we make wiser decisions with the analysis that is backed by real knowledge of financial figures and qualitative reasonings.
And that brings me to where i am --- investing
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