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