Rising to the challenge

A simple conversation that revolves around the share market inevitably brings out
real life stories of easy money (rare nowadays ) and a suckers game (among the big losers )
Depending on who you hear from ,stories abound as to how one can outsmart the market and the other players by inference and conversely how the market swallowed them whole,lock stock and barrel..

Granted these are not easy days where all you have to do is to buy on some weird rumour and hope to
cash in big a few hours later there are still lots of money making opportunities ,if only one knows how..
The advent of  internet trading and the coming of age of Gen Y players have resulted in a paradigm
shift in share investing and trading...There is a distinct preference for a shorter time holding period
,probably in line with the younger generation's belief in quicker returns ...patience is sometimes not
inherent in their game plan...unfortunately though this lack of patience may sometimes backfire ..some
play into the hands of share operators ,others lose their sense of affordability and gamble big with little
homework done and more often than not lose their hard earned savings fairly quickly...

The New Year will provide new challenges or obstacles and depending on how you view it ,there are lots
of chances for respectable returns over the mid term..If one is new to the game or lack the resources to
learn the intricacies of the share market ,perhaps a preferred option to trading or investing would be
to seek out a knowledgeable remisier or dealer rather than going in alone trough on line trading..After
all with the low brokerage cost environment the cost differential is not significant..the headache or
heartache resulting from ill advised stock purchases or sales may far outweighed the negligible savings
from a DIY type entry...Not to be ignored too is the time tested homework like stock research,chart
pattern analysis and ongoing news development ranging from politics to macro and micro economics...
after all if share price movement is a summation of all things under the sun how can one possibly
leave out any single variable and then claim to have mastered the art of trading or investing...

May 2013 turn out to be the best yet...

 Gross and Net returns

Now that we are at the year end there will be many who will do a comparison of returns of various
asset classes ..by that I mean a comparison of  returns from say investing in bonds,time deposits,
properties (rental plus capital gains ) and finally from  trading/investing in shares and futures...we might
even be tempted to compare against returns from gold investment and foreign exchange trading..It would
be difficult to compare all the above side by side as it is like comparing an apple to an orange but regardless
the word from the street is that most are rather disillusioned from their investment returns from the share
market...Seems that finding a winning stock during 2012 is like finding a needle in the haystack and worse than that is that there are so many duds and minefields in the playing field (stock market ) ..and this is against
a backdrop of an all time high in the CI and a net rise of about 9 % for the year...Incidentally this rise pales in
comparison to neighbouring countries...

Interesting and thought provoking comments have been made by the man -on -the -street regarding the other asset classes in 2012 which deserve a brief mention..among which are as follows..

1. Properties - Astronomical chances of substantial capital gains in 2011 and although less in 2012 the capital gains are commendable ..Rarely hit minefields and rental yields are stable and generally uptrending
2. Bonds / time deposits - lacklustre against rising inflation but no headache or heartache either...
3. Gold /other precious commodities...Scam based ones hogged the limelight but genuine schemes gave respectable returns
4. Forex - exciting playing field for the select few but expert traders love the idea of trading where you rarely see a currency crashing down to oblivion unlike the share market where such phenomena is fairly common...

The share market is a different ballgame altogether...Unlike others there is literally no barriers to entry..
Just about anybody can buy or sell ,with minimal capital or share market knowledge (or so it seems ) and
with online trading you do not need assistance of any kind either ...but herein lies the danger...Many newbies
think they can outsmart the market and hope to leverage on their limited capital by buying on contra...In
2012 alone many got burnt and swear never to return to the share market..! Perhaps it might be timely
for newbies and even seasoned players to remember the following  ...

If you are  a high risk high return trader....
1) watch your stock like a hawk (pun intended )...regardless of your trading technique .stay grounded and trust your instincts.. If you think the trade is going against you, cut your positions and localise your losses...never go against the market...

If you are a mid to long term investor.....
1) as no one can be 100 % accurate it may be wise to use a yield based method for stock selection ie if a stock historically provides a dividend yield of say 6 to 8 % return at entry point then you may want to invest in such a stock as any capital gains thereon is a bonus..( some newly listed REITs did perform superbly in 2012..)

2 ) The often quoted mantra of going for high growth stocks is still relevant...In 2012 O n G counters were star performers and may still be in 2013...yields aside ,catching these on sharp dips or correction mode may just provide the respectable returns next year .Not to be discounted either are quality plantation counters that stayed underperformed in 2012,,after all prices of commodities like palm oil cannot stay low forever...

One other unique feature of the stock market is that its "low" entry requirement is a double edged sword..There were many who made good returns only to have the returns lost due to subsequent bad trades...The ease and hence temptation to enter and exit on many counters over the year can easily mean
solid gross returns on some and losses on others and hence giving rise to a net return less than time deposits...perhaps a more disciplined approach to share trading or investment may just do the trick in 2013

Have a good weekend...

 A New High


The new CI level achieved today should have brought cheers to every investor or
punter in town but a random check with most would instead yield a mixed bag of
reactions ...by and large the biggest winners were those who invested in some
heavyweight consumer stocks, telcos and the oil and gas counters...that said there were also
big winners among traders of speculative stocks if they have gotten the timing right and not
discounting  those who got the timing right in entering and exiting some call warrants...in fact
there were quite a number of call warrants which have doubled their prices in just a few short
days...kudos to those big winners...Not so lucky were those into less exciting stocks like property
,construction and trading companies..Even worse were those who joined the chase of third liners
late in the game and got their hands and everything else burnt...

There are many who want to forget their "experiences " this year and are hoping for a better
start next year...a fair aspiration considering that the CI has reached new records and yet some have not
even managed to earn a return better than time deposits !

Monday is the last trading day for the year and maybe ,just maybe lady luck may still descent upon
those who need it most ..perhaps through a lucky punt on a window dressing counter...

The battle is not over yet...

A breath of fresh air

As if the market has taken cue of the various complaints and "sighs' yesterday ,things are
looking much better today...Volume has doubled that of yesterday 's noon performance..All things
being equal everyone must be looking forward to a stellar year end closing .hopefully premised upon
a broader based window dressing exercise...

Some GLCs have moved with more aggression today and if this trend continues it will go a long way
to giving more confidence to other laggards to move along...Confidence among retailers is key to
a more robust market...Nobody likes to lose forever or sit on assets that give negative returns !

Keen market observers should be able to "catch" low premium call warrants and ride the upside in
line with the mother share...Seasoned players can sometimes make returns of close to 100% in a few
hours "work" literally ...returns which only  trading on futures can provide...on the other extreme it would
take something like 10 to 15 years ( even taking into account interest compounding ) to do the same with certain time deposits ...And that is what makes the stock market so different...

If and a big "if " the year end momentum continues it may be wise to search out yesteryear favorites for
a possible trading opportunity ..A sustained volume build up is normally a requisite to such possibility

And for more conservative investors sitting out ,an upward thrust can still mean increased paper gains or
reduced losses...not too bad either way...

Terminal Volume

Not so long ago I wrote about the recent drop in daily overall market volume and its
possible implications on share prices..Daily volumes of about 700 to 900 m shares were traded
then...that unfortunately have since dwindled to an even more worrisome 500 to 600 m shares
the last few sessions..a sure sign of a lack of interest and confidence in the share market...Again there
is no point debating the probable causes...a more fruitful discussion would be to do a brief analysis as to
the type and nature of the buyers and sellers in the current market and hopefully one can spot opportunities
for bottom fishing or scalping activities...

In a worst off scenario an extremely low volume can "stall " a market not unlike a plane in the air which
 has cut its airspeed too drastically ..but the market as it looks now does not seem remotely close to that
..fortunately...Conversely a low volume has its silver linings too ...as contra or short term players are substantially out ,there would be much reduced forced selling activities which can depress prices further...As
long as the forces of buying and selling are in equilibrium ie normally at strong support levels the prices would
hold..there might be temporary breaks below but they are usually mended in the following days...of course this pattern may not hold for shares which have heightened "play " or are been sold down due to undisclosed
negative development..Fundamentalists should take note of "equilibrium" levels as a possible entry point when the market shows signs of an uptrend...Chart readers would use this bottoming as a potential entry point as well.but caution is still key as depressed volumes and margin calls or uplifting of share moratoriums
can break long term supports just as easily...   

Lulls in market activities can enable sharp eyed observers to look for potential insider buying and selling as
well ...Bid patterns can highlight "unusual " buying or selling patterns which are sometimes not discernible
in charts..Small to significant profits can be made ...if the timing of entry or exit is correct...An early sell
action may also save precious capital from going down the drain...

That said ...many are still hoping for a partial window dressing exercise on the last trading day...

A Christmas blog

Needless to say most of us would have celebrated this very special day in a joyous
mood ....besides the exchange of pleasantries and presents some would have taken
the opportunity to rebuild or strengthen family ties and touch base with old friends.

To me ,Christmas in particular gives a very special aura...perhaps movies depicting
falling snow ,Santa going around the world spreading messages of hope and goodwill are
somehow ingrained upon me ever since I was a child and these powerful images make Christmas
different from other times of the year...

This year was no different ...My daughter surprised the whole family with her home made presents..
a culmination of 10 days of hard work in creating lovely and priceless gifts that in her opinion best
represents the liking of each family member ...like in my case ,she plastered an image of my all
time favourite singer in her creation...And I am convinced all parents out there would
be equally thrilled to receive such well conceived presents from their loved ones...

Some of us will have to begin tomorrow like any other working day ..and for those fortunate enough
to sleep in ..sweet dreams and happy holidays...

MERRY CHRISTMAS !

 No presents from Santa

Those expecting a pre Christmas push today must have been disappointed..the
gainers were mainly restricted to super blue chips with the broad market completely
lack lustre...in fact the overall volume was a meagre half a billion shares which must
rank as one of the lowest this year..If this trend continues after Christmas the laggard
stock prices might just recede further due to poor absorption of normal due date contra selling...
Still let us not feel dispirited ,instead we should just look forward to a better trading year in 2013..

Merry Christmas everyone..!

Getting it right...

As correctly guessed or speculated the world did not end and we are on safe ground ..
ready to embrace the new year with renewed vigour and conviction...

Now how nice would it be if we can as easily rightly speculate the movement of share prices..
so much headache and heartache will be avoided and everyone goes home happy...If only...

Other than the few privileged ones aka the "insiders" lesser mortals like the most of us will have
to resort to all types of trading and investment techniques to get it right .Countless hours are spent
learning and mastering the chosen technique or cocktail of techniques only to be frustrated at times
by unexpected turn of events...I personally know of many fundamentalist investors who have painstakingly
built up their share portfolios and just as they were about to realise their hard earned gains ,some unfortunate
events occurred which in some cases literally wiped out their paper gains...and everything went back to square one ...

There is really no fool proof method of getting it right all the time .The often advocated method of setting
a cut loss point can be counter productive if it is set too low or too high..Stock manipulators may guess your
game plan based on technical charts and easily flush you out unnecessarily.In addition some stocks are rather
illiquid and that can throw technical analysis readings off course...perhaps a more practical route would be
a methodology based on your own analysis of the chosen stock or stocks...If stock price movement is as
unpredictable as the weather itself why should one restrict himself to any one trading technique,one should not try to apply quantitative science to an art form...Quantitative prediction techniques including charts and various software applications are helpful tools but are far from being sufficient for real life trading...a serious
trader should incorporate subjective elements like the average human trading psychology .unexpected news
developments and many others to increase his chances of getting it right..simply put there is no short cut
...do your homework and leave the balance to fate...

Have a wonderful weekend..

End of the world day = Winter Solstice day ?

It is close to 8 pm now ..just  another  4 hours to go and all of us can breathe easy again !

A couple days ago my family had a lively debate about this "auspicious " day...throwing in exchanges
of the morbid ending of mankind to the beginning of a new chapter in life,,,I am sure similar exchanges like mine are echoed across  many families and  communities across the world...but I suspect at the end of the
day (pun intended ) we are all going to sleep well tonight and welcome tomorrow as always...

Speaking of exchanges ,my daughter has come out with a few..which seems rather ideal ,at least from her
viewpoint..The list includes the obvious like there is no more necessity to study ,no homework and worries about exams...
spend all her pocket money ,.empty her kiddy savings account...and for the dad and mum no more career
worries (which includes the share market ) ,family squabbles and financial pressures of any kind ..in short
spend all you have ...after all things are going to end anyway..and for once everyone is equal...
and the super rich can't buy themselves out like in the movie 2012 (a billion bucks to secure a seat in the
ark like ship )...and for once the poor would not feel handicapped in anyway !

To something more positive...Today by coincidence (or is it ?) is also the Tang Yuen ( in mandarin ) or
Tong Yuen ( cantonese ) festival..where colourful and sweetened flour balls are a must have...As a
child I used to watch my mum prepare these in a sugary solution ..though not exactly my cup of tea ,I know
of many including my wife who loves them especially those stuffed with nut paste  and the likes...

My warm wishes to all who are celebrating the Tang Yuen festival today..

When rumour is stronger than fact..

It amazes me sometimes that some shares get chased up sky high on unfounded
rumours ...when the buying momentum is so strong even die hard disbelievers can find it
hard to resist the urge to buy no matter how ridiculous the rumour may sound to the
critical mind...after all you begin to ask yourself ..how can so many be fooled into buying
in such large quantities...then again history has shown this phenomenon to happen time and
again...

That said, lots of traders and short term traders love a good story ....most do not
bother whether a change of ownership actually enhances share value ,they are more keen
to ride on the momentum before the music stops..Conversely this same group would not
even give a second look when factual news like improved results are announced...this value
enhancing news is normally deemed not "sexy" to the market..It would take a gigantic dividend
payment before the share price improves marginally...

All is fine with this rumour based chasing but what can be worrisome is that the rumour may be
"planned" to spread like wild fire and induce or lure innocent and naive retailers into the surging
shares only to be burnt severely after the denial...Millions can be made or lost within days
depending on which side of the fence you are sitting on....and obviously you would not want
to be on the wrong side...

If you not sure, perhaps it may better to be safe than sorry....

High Anxiety...


Like most parents ,I was more stressed out than usual,not so much due to the share market
activities but the anxiety of waiting for the release of the PMR results..The funny thing is ,we
as parents may not be too concerned with the actual performance of our child,after all it is
just a relatively junior examination with little bearing on career prospects,,,I for one was actually
more worried about the impact of the possibility of "less than perfect" results on my child...the peer
pressure thingy which can affect a young mind...Luckily as it turned out my fears were unfounded and
all turned out well...It did set me thinking though,why do the current society expect every child to go for
straight As ...even an A short can be deemed a failure to some parents and their child...being a "baby
boomer  generation "child, I remember things were so much simpler then ..I do not remember my parents
engaging in conversations about As or stuff like that..most of my friends may be competitive in games but
comparing As were never in the horizon...that said,during those days securing an A did give an immense
sense of pride as everyone knew it did not come easy...in fact I remember securing just an A2 for my
LCE ( as the PMR was known then ) instead of an A1 because I had 2 errors out of the 50 objective
questions ...my friends who had perfect score or only one error scored an A1...nevertheless we always
felt really good scoring an A...guess times have really changed...

With the results all done with..lets hope these young minds regardless of their performance will move
forward with enthusiasm and we parents enjoy the ride together with them..

A perfect market...

Someone once asked me this rather simple but pertinent question..What exactly is
an ideal market and what will it look like ?

We all know an ideal or perfect market cannot exist in an imperfect world..where the
share price at any one time merely reflects a balance between supply and demand ,all
information published or otherwise is known to everybody and the choice of buying ,selling or
doing nothing is a personal choice and ideally reflects his perceived value of the share after taking
into account everything there is to know .There are no insiders nor any unknown variables that may
unfairly affect the share price or give an advantage to certain parties...

Wishful thinking but would it not be nice if we can relate a share to say a fixed property like a house..Before
we purchase a house we would have done the necessary homework like whether the property is encumbered, quality of the finishing ,lease period etc...in short we would have a chance to know what we
are in for,if not fully at least substantially....conversely when buying a share despite our best attempts at
researching the published data ,financial or otherwise the possibility always exist whereby we may get
short changed ,and the main culprits more often than not are the insiders which invariably rob the
"add on" value brought upon by new positive development to a company eg a major concession  or a contract..this phenomena of unexplained climb in prices preceding an announcement does give rise to an air of suspicion ,speculation or not there is no smoke without fire...Conversely a unexplained drop could be later
(much to chagrin of naive and not in the loop investors ) determined to be due to  poor financial results ,loss of concession and so on...

How nice would it be if the playing field is level...

Opposite directions...

A long time ago any serious trader or investor would stay glued to the

CI for trading opportunities..be it for short to mid term investment,intraday or even
intra-hour ..Every single tick upwards or downwards will almost immediately cause
the broad market to react correspondingly...the quick minded will capitalise on any
laggard stocks and ride the swing ...the combined actions of so many give rise to a
action packed trading platform ..money is made and lost but everyone seems to enjoy
the ride nevertheless...alas, all that seems so remote nowadays..

We can have days of CI upswing but the broad market hardly wakes from its deep
slumber..Day in day out the "usual suspects" hog the lime light ,pulling away to new
highs or thereabout but leaving all the rest behind as if bogged down by heavy chains...

Plenty of literature has been written as to the probable causes so I would not want to
delve into it..however to the newbies they may want to take note of the following
observation..As stock prices are a function of supply and demand which in turn correlates
closely with the confidence factor,it can be worrisome if a big jump in the CI is not
accompanied by any increase in broad market volume and stock prices...Why so ?
The simple explanation is that when the CI reverses subsequently either the same day or
following days ,those lethargic stocks (which are plentiful in current market ) which did move
up in tandem with the CI earlier may actually fall futher...this vicious cycle of digression between
the CI and laggards would eventually lead to further price erosion ,losses and confidence ,in that
order..

How everyone wish this is not the case....

Diminishing volume..is there a problem ?

We witnessed a noticeable drop in the overall traded volume today...is this a one off
phenomena or a beginning of yet another "new average daily volume"...it was not
so long ago that we had daily volumes of about 1.3 billion shares and even then we were
lamenting about the lack of volume and market activity...When it dropped to range between
800 m to a billion a day the last few months we were even more discouraged...after awhile
we sort of "grow accustomed to it '' another way of saying "we cannot do a thing about it ,take it
or leave it " ...and today we are yet confronted with a new low..Is this a new "trend' ?Do we then sit back
and not trade or invest at all and wait out this winter season ? Of course this should not be the case..can
you imagine if everyone adopts the wait and see attitude ....the preferred strategy would be to tailor
your trades or investments in line with the reduced market activity...but before we do that we need to
know and understand the implications of a low volume environment...So what does it really mean other
than the frequently quoted reason ie" lack of market confidence..." In practical terms  low overall volume may affect the following..

a ) reduced market making activities..although not a bad thing per se but this can affect retail participation
     which in turn affects stock liquidity..illiquid stocks can result in heightened volatility eg normal contra
    selling alone can result in severe drop in prices which in turn further dampens confidence...

b ) hinders corporate exercises..a healthy volume and accompanying confidence will enable share rights
     for instance to be actively traded without which the cum rights price may not be attractive enough for
     investors to subscribe...similarly share placement exercises which are important for raising capital may
     have to be postponed or cancelled...

On a more general basis ,low volumes simply equate a marginalised market which is not conducive in
attracting foreign investors...and this vicious cycle can in turn cause a even more severe drop in volume..

Or perhaps today is a one off phenomena and everything goes back to "normal' tomorrow...We shall see...

Tragedy of the worst and most heart breaking kind. 

Just when all of us thought we could perhaps take a step back and look forward
to winding down in preparations for the Christmas and New Year season and not
focus and lament upon the not so inspiring year for stocks we were startled from 
our dull senses on an extremely tragic news ....the massacre at Sandy Hook
elementary school on the other side of the world...As a parent myself ,I can feel
the tremendous grief and pain cruelly inflicted on so many loved ones ...no words of
comfort can possibly lessen the pain of the parents,relatives and friends on the loss of lives of such beautiful kids..such senseless killings even surpass that of those you watch
on some horror channels...why any human being no matter how unwell could have resorted to such cruelty is beyond my comprehension...

My thoughts go out to all those who are directly or indirectly related to those children...
The lives destroyed by this mad incident go far beyond the children and teachers who died...parents ,relatives classmates ,friends may have their mental state of mind damaged
beyond redemption if not properly and carefully managed in the coming days and months..

As always the blame game will start with a bang but will surely drop to a whimper like all  past incidents...and the status quo on gun control and so forth will likely remain..

Lesser beings like some of us can only watch with despair at how helpless we are in trying 
to make this world a safer place to live..

In perspective ,perhaps we should not over react to our losses ,especially of a financial
nature ,say from bad stock trades...After all it is like complaining that we have no shoes
to wear to those without legs....

Hope you are having a good weekend...

Managing expectations and sense of proportions...

In my many years of dealing and conversing with clients or friends alike ,it comes
as a surprise to me when well educated and highly intelligent people falls short when  applying basic mathematics to the stock market..even fellow professionals
like accountants can lose their "sense of proportion" when trading or investing in the
market...I cannot pin point the exact reason but  I suspect it has a lot to do with relatively "cheapness"
and high volatility and liquidity of this asset class (shares ) compared to say real properties ,bonds or time
deposits...A return of 10% to 15 % on capital gains for properties are deemed acceptable, As for time deposits
a rate of 3 to 3.5% is accepted norm though it hardly covers the real inflation rate...But somehow when it comes to shares
most seem to think a single bid gain as been "ridiculous " when it may mean a 5 % return on a 10sen share....that 5% can
be realised in a second literally or perhaps in an hour or two ..hypothetically translating to an astronomical 1300% return per annum
if you succeed in doing this every day...Granted there are brokerage and other charges ,this can be surmounted or much reduced due
the low or near zero cost environment nowadays with the advent of online trading...not to mention in real life situation one will buy
considerably more than one sinlgle lot of share...
The other common observation noted is that some retailers seem to disregard return based on % altogether.Instead they look at
absolute returns eg 3 to 5 sen as a minimum desired return when that quantum may translate to gains approaching 50 or 100% if the
share price is around that level! ...and we all know that would be highly improbable (except for extremely rare occasional plays or privatisation
exercises ) ...Tell a retailer to sell his 10 ringgit counter at 10.50 and he will love you to bits ..tell him to sell a 10 sen share at 10.5 sen and he
may think you are nuts !

Ironical but true !

Note : To know more about me, you can also visit my website www.chrischootrade.com or you may contact (012-2009389) to find out more.

Regards,

Chris Choo

Is there a base value for shares ?

This is a very interesting question which many of my friends like to ask ...what exactly is the base level if there is one

in the first place ? Is it the intrinsic value of the share eg NTA , breakup value or is it a chart based support level eg

200 day SMA , a triple bottom or the price reached when the index is at a 5 year low  ? In reality there is no base price...

The share price at any point of time is simply a function of supply and demand and that being the case there is no permanent

base price ...and with  that in mind one should understand that his portfolio of shares is fully exposed to the vaguries of all

factors affecting the price movement of his shares...This simple fact has important ramifications...and should not be lost on the

average investor or trader...Why so ?

Imagine someone buying into  2 or 3 counters at a certain point of time , say day 1 , Assume also that he has no holding power

and as such need to square off his position completely by due date..ON day 2 ,one of the 3 counters goes up and he takes his

profits ( which is easy when you are winning ) and holds onto his other 2 counters which didnt move either way...His rationale is

simple ...he is hedging his bets ie in day 3 he hopes his non performimg shares will go up...but more often that not in day 3 ,also

the due date there is a strong possibility his 2 counters which didnt move up in day 2 actually drops further..This drop can be due to

broad market weakness or just normal selling affecting these 2 counters...and the net effect may result in him suffering a net loss

on the 3 counters in totalilty ...this seemingly simply analogy surprisingly does not dawn on many retailers...and the sole reason could

be just that he believes in the "base value " concept when in fact it does not exist !

Moral of the story....invest /trade to your financial capacity and not beyond..there is no "safe " price to a share...

Note : To know more about me, you can also visit my website www.chrischootrade.com or you may contact (012-2009389) to find out more.

Regards,

Chris Choo

Warrant Deception

Sometimes it amazes me to see the kind of money one can make or lose trading on warrants, be it the normal company issued warrants or call warrants ,
all it takes is the mother share to move  up with volume and before your very eyes the warrants will trade with such exuberance and velocity as if there is no tomorrow....

Granted everyone wants to make a quick kill and pocket some easy cash ,but the late entrants may be in for a nasty surprise if they fail to sense nor see the reversal in which case they will be left holding the baby ie in some cases the value can come to a big fat zero if held to maturity !

It would be prudent to at least check the following "basic ' facts before one ventures into warrants..

a) the period to maturity...the call warrants usually has a one year maturity ( which is short in share market terms )

b ) the conversion ratio....a 1: 1 (typical of normal warrant ) is obviously "better " than a 3: 1 (which is common in call warrants )

c ) conversion price ....can be tricky to a naive retailer who only considers the absolute trading price without taking into account the conversion price and conversion ratio...in fact in recent days you can easily spot warrants being bought up without apparent reference to either conversion price or ratio ...in some cases not  even the impending maturity period...do they expect the mother share to appreciate by another 30 % in the next one month ?

All said ,a little bit of homework before you invest may save you the heartache and headache (and hole in the pocket ) at a later date ...


Chris Choo

Entry Point...

As in the case of timing the exit point , the entry point poses equal challenges....

No matter how 'hot' a stock is ,if you don't get the right entry point( price ) you will either

not make profits or worse can actually end up with a loss instead. Many years of watching how

retailers invest or trade have reaffirmed this...." I will only buy in when a definite uptrend has been

established " This train of thought seems logical in the context of a healthy robust or outright bull

market where demand breeds on itself  ,becomes a self fulfilling prophecy and until the music stops

everyone goes home happy ! ...Regardless of the trading technique ie chart or fundementals etc, the

average investor normally loves the surging volume and price as the "trigger " point for entry and more

often than not would end up buyimg near the peak if not the peak price itself and watches with despair 

as the price inevitably recedes over time or collapses  within a blink of an eye....the more savvy would

probably escape this "sickening feeling"...

There is no iron clad method of preventing a bad entry point ( and consequently a bad trade ) but a few

basic pointers may include the following.....( assuming current market conditions )

a ) if a share has already moved up by one to two bids ,chances are the PDTs or the bulk purchaser ( day trader ) will probably unload the share for a quick profit ...

this action will naturally dampen sentiment and put an end to the uptrend unless a real basis for a push exist eg major contracts , super profits etc...

It may be better to skip the counter altogether than chance an entry at the higher end....and get caught...

 b ) Watch out for counters whose price seems to hold steady in a broad market weakness and depending on your

 risk appetite make an entry if volume continues to increase steadily over the day....could certain parties be collecting

 during market weakness and thus giving an air of steadiness to the share price ?

c ) If a disclosure before or during trading hours on a particular counter seems positive ( in your best judgement ) eg profits

above analysts' expectations ,then you may want to make a calculated entry risk..if the counter has yet to move up in a

meaningful way ,or better still not at all....

d) on the other side of the spectum ,a counter that has seen continuous price drop over a few sessions or within the same

trading day could provide a good entry point if there are no exceptional reasons for its drop  ( eg adverse financial condition ) other

 than profit taking or contra due date selling....

Last but not least it is always prudent to remember that what goes up must come down ( somewhat ) and with that in mind never hold on to a share forever ( except possibly a handful of super high yielding blues chips ) ...if u miss the first ride ,wait it out....

Note : 

Chris Choo will be giving a talk on Price Action Technique (PAT) on Saturday 15th December 2012.

Date : 15th December 2012

Time : 9:30 am - 1:00 pm

Venue :

Unit 809 Block A

Lift Lobby 3

Damansara Intan

No. 1, Jalan SS20/27

47400 Petaling Jaya

Fees :

RM 250

For further inquiries, please contact Julie (012-2009389) to reserve your seat. First come first serve basis.

Thanks.

Chris Choo

When.. Why... I should sell ?

Hello Readers.....

How was your weekend?

One question always I come across among traders is..... 

When do you sell ?

This seemingly simple question is NEVER simple in real life....

Again supposedly common sense will dictate that you should sell when the technical charts or whatever trading technique indicator you subscribe to tells you the highest point (price ) has been reached and you should take profits.

In practical real life situations it is indeed possible for most to make that decision and move on even though more often then not the selling price subsequently turns out not to be highest...the seller consoles himself by rationalising that one needs to be contented and accepting that the buyer of his shares "deserves " to also make some gains for taking over his shares at a higher price...

All is well and everyone goes home happy....AS LONG AS the share keeps going up ...

The nightmare begins when the bought shares start coming down.....

From my experience, most find the going gets tough when shares begin a downtrend especially when they have bought the share only minutes ago !...the minutes become days ..months ...years and decades ! The average investor trader has a built in psychology that one should only sell when there is profit. A logical thought that is taught to any child....but...since when did anyone said that this golden rule of business apply to the share market ?

The more appropriate rule may sound something like this...

- if  you are a mid to long term investor you will  have  done lots of homework to pick good quality stocks which provide  steady dividend yield plus capital growth in which case cost averaging may be the best way to bring down the effective cost of acquisition. Sell only when there is a change of asset quality due to whatever reason or on a personal level a need for cold hard cash!

- if you are speculating and merely a intraday /short term trader ,you should never lose that all important trading perspective ie; you bought in the hope of making quick gains ...chances are the share has poor fundamentals or the buying price is already been chased up prior to your purchase. Both these elements should be at the back of your mind all the time...a quick exit at minimal profit or loss is the order of the day....no two ways about it ....bite the bullet early than be sorry if the trade goes against you...selling at your purchase price or even a bid or two lower may save you the pain of holding massive paper losses which equate real losses...

Trading and investing are 2 distinct animals ( pretty sure you're fully aware of this)

By the way, I will be the speaker on the following topic PROFITABLE INTRADAY & SHORT TERM TRADING METHODOLOGY, at Jupiter Securities Sdn Bhd ..

Date : Dec 15 ,2012 ( Saturday ) Time : 9.30 am to 1 pm

Address : 

Unit 809 BLK A
Lift Lobby 3
Damansara Intan (Next to Tropicana City Mall)
NO 1, Jalan SS20/27
47400 Petaling Jaya

Fees :
RM 250 per pax.

Please contact Julie (012-2009389) for further inquiries.

Thank you

Chris Choo

LAZY SUNDAY READING PLEASURE

Good evening ....

A good friend of mine once asked me this simple but very pertinent question

Is there a one size fits all style of trading or investing in the stock market ? Interesting question considering that we all know that there are countless methods ranging from the software based "scientifically" packaged to the rule of thumb guess work style adopted by many. 

That said I would like to add my 2 sen worth as follows....

Instead of deciding on any one style it may be better to categorise stocks according to their historical movement trends  and only then decide on the best method to apply....A practical but realistic approach may be as follows...

 Heavy weights ( blue chips ) : These are fund managers favourite haunts and hence the the fundamental analysis based method may be most suitable. Changes in performance  ( profits /div yields ) will affect the share price. So it is only logical one should pay close attention to such data and analyst writeups...

 Growth stocks : These "aspiring " counters are plentiful and are the favourites of middle level investors, mainly individuals who love a good story line and will lap up well researched reports. As the mix between mid term players and short term opportunists are quite balanced here ,the best suited method could include a combination of technical analysis, fundamental analysis and other momentum based techniques...

 Lower liners ( speculative ) : These are the volume kings and form the main stay of top 20s day in day out. Being mainly retail based and where price movement not necessarily driven by fundamentals nor corporate developments, momentum or trend based trading methods are most suitable. Imagine trying to apply fundamental analysis on a PE 100 stock and trying to "justify " its share price climb...You either join the band wagon or sit out the bulk of the trading action everyday in a bear and quiet market as is the case now....

In short it may make sense to know the type of trader or investor you are before you worry too much of the trading methodology..

Happy weekend & wish all will have a great profitable week ahead. Till then happy reading on lazy sunday.

Thank you

Chris Choo

chrischoo007@gmail.com 

MARKET TALK - PRICE ACTION TECHNIQUE

Hello Readers, 
I will be the speaker on the following topic at

Jupiter Securities Sdn Bhd ..

 Topic : Profitable Intraday and Short term trading

 Date : Dec 15th ,2012 ( Saturday )

 Time : 9.30 am to 1 pm

 Address : Level 9 , Menara Olympia ,Jln Raja Chulan 50250 Kuala Lumpur

 Do contact Customer service if you want to know more. 

Thank you

Chris Choo

chrischoo007@gmail.com

KLSE - My Opinion

Hi readers,

If you are a trader and you are facing a falling market and for various reasons you are still holding on to some speculative stocks ( did not sell earlier for various reasons ) what do you do ? The urge to sell off everything can be intense and real. 

But it be wise to sit back and perhaps consider the following....

- Are the stocks really heading into oblivion with no chance of recovery in a market reversal..ie a potential PN 17 company ?

- Do you have at least middle term holding capacity ?

- Is the fall in the broad market overdone and is due for a technical rebound ?

- Do you foresee an impending market meltdown locally or overseas in the near term ?

If your answer to the first and fourth question is a NO and a YES to the second and third question there is indeed no reason to panic in which case the better course of action would be to consider cost averaging or at the very least sell only when the technical rebound loses momentum.

Thank you for reading

Chris Choo

please email me if you have any queries. chrischoo007@gmail.com

KLCI....MONDAY DEC 03rd, 2012

Hi readers,

Stating the obvious....

There are some investors /traders who take a very microscopic view of the share market...trying to second guess or worse out with the market. As it will not take a genius to know that the quieter the market is the lower the chances of selecting a high performance stock...No matter how good or fundamental a stock is ,if there are few buyers.  How does one expect the share to go up meaningfully ? At best it may move one or two bids up but anything more would require a herculean effort. 

Conversely should it fall later the inverse would be true..with few buyers the fall can be exaggerated , possibly even more than the initial rise...that is why sometimes it may be better to let an opportunity go by than to catch a  subsequent falling knife ! Instead try looking for hidden gems within the broad market by identifying "real" collection patterns. 

The collection price might serve as a base price for a rally at a later date...

 Have a good day.

Thank you

Chris Choo

email me if you have any queries at chrischoo007@gmail.com