The US market was just about bullet proof on Friday. Microsoft came up short and the stock tanked. Amazon tanked 8%. Broadcom dropped 7%. The market ended up flattish. In the meantime, both the transport and the Dow index are now above their recent highs. The so called Dow Theory is now bullish....Time to turn bullish ? Maybe but be agile.....
The property market ? It is winter. Not a lot of new listings. Prices are holding up. What is there to tell ? The only good news is some houses (seemingly asking too much in my opinion) remain unsold.
Saturday, July 25, 2009
Sunday, July 19, 2009
Watching paint dry
What is there to say about the Sydney property market ? It is certainly good to have my Saturday back. Not a lot of choices. Prices remain high. We have gone from focusing on the LNS market. And now we are even widening our search to the Upper North Shore. Prices in Lindfield and Roseville are certainly not especially affordable either. The way things are going we will be looking at Newcastle next :) Just plain boring. I figure it will be more exciting watching the Masterchef grand final today. I love the show. It is a different kind of reality show where the hosts come across as genuinely trying to help/teach the contestants, instead of creating a snake pit. By the way, hate to say it but I suspect property prices may not come down in a hurry either. The other day I saw this article about how investment banks in Australia are really doing well this year. They have benefited from all the placements earlier in the year. 2009 is shaping up to be a very good year relative to 2007-2008. No wonder the more expensive houses are starting to move.
Turning to the stock market, same story....The US market has gone back from the edge of the abyss and is looking to challenge the recent high. The so called "head and shoulder" topping action has been averted. We will see how sustainable is it. Volume on the decline and the recent surge has been quite dismal. Suspect we are still in the middle of no where despite more confidence about the global economy pulling out of this mess relatively soon. Now there is this emerging idea that we are looking at a "square root" recovery. What will happen next year is NOW the BIG question ?
How does one cope in this environment ? One common mistake people make is they think they have to act all the time. Sometimes it makes a lot of sense to just stand on the sideline and observe. My philosophy with investing is one can make very good investments during crisis. It is almost guaranteed that something will go amiss over the next 4-6 years. The period in between is more about maintenance and protecting capital. Maybe now is such a time....
Turning to the stock market, same story....The US market has gone back from the edge of the abyss and is looking to challenge the recent high. The so called "head and shoulder" topping action has been averted. We will see how sustainable is it. Volume on the decline and the recent surge has been quite dismal. Suspect we are still in the middle of no where despite more confidence about the global economy pulling out of this mess relatively soon. Now there is this emerging idea that we are looking at a "square root" recovery. What will happen next year is NOW the BIG question ?
How does one cope in this environment ? One common mistake people make is they think they have to act all the time. Sometimes it makes a lot of sense to just stand on the sideline and observe. My philosophy with investing is one can make very good investments during crisis. It is almost guaranteed that something will go amiss over the next 4-6 years. The period in between is more about maintenance and protecting capital. Maybe now is such a time....
Sunday, July 12, 2009
An interesting trade
I am just about bored by the property market in Sydney. Not a lot of stocks out there. And owners are still expecting good prices for their properties. Just so boring.....
One suspects the stock market is far more interesting right now. The big bet is will the world recover next year ? Basically, I suspect no one has a clue.
One interesting trade idea is to go long volatility in USA. The VIX index has come down from the high. Think it was 60-70 at its peak and has since declined to around 25-30. For a long time before the current mess, volatility was hovering around 20 for quite some time.
I suspect going long the VIX index is not such a silly idea. Or maybe think about ETF like VXX. If you tell me the world is the same as 5 years ago, I suspect you are not going to be TOO right in the future. The world is on the cusp of a lot of changes (inflation or deflation, the start of the secular demise of USA/USD, is the miracle of China/Australia a mirage etc etc...). I don't know anyone who will get all these changes right. But what I know is a lot of people are going to be wrong at some point on one of these big upcoming changes. A little protection is not such a bad idea.
One suspects the stock market is far more interesting right now. The big bet is will the world recover next year ? Basically, I suspect no one has a clue.
One interesting trade idea is to go long volatility in USA. The VIX index has come down from the high. Think it was 60-70 at its peak and has since declined to around 25-30. For a long time before the current mess, volatility was hovering around 20 for quite some time.
I suspect going long the VIX index is not such a silly idea. Or maybe think about ETF like VXX. If you tell me the world is the same as 5 years ago, I suspect you are not going to be TOO right in the future. The world is on the cusp of a lot of changes (inflation or deflation, the start of the secular demise of USA/USD, is the miracle of China/Australia a mirage etc etc...). I don't know anyone who will get all these changes right. But what I know is a lot of people are going to be wrong at some point on one of these big upcoming changes. A little protection is not such a bad idea.
Sunday, July 5, 2009
Serendipity
I haven't blogged for a few weeks now. A few things happened. Who says life is not full of surprises. My old PC blew up and I have spent the past few weeks trying to buy a new PC. I bought a Dell and it was supposed to be delivered around 12 days ago. It did not arrive. I spent the past week trying to sort out the mess. It was one VERY frustrating process. Spent hours on the phone with Dell's delivery agent (Schenker). It was a truly awful experience to say the least. Finally, Dell got onto my case after I sent several emails to the customer service representative who sold me the PC. While I am feeling a bit better, it is a lesson in brand/marketing. A lot of good will/brand can be blown up by the little things. The lesson is, when there is a problem, it is far better to proactively manage the case. Even if it involves making a call and say we don't know where is the PC but we are looking into it. A little effort makes a huge difference.
I must say I am feeling quite fishy about the stock market these days. Be careful out there. If green shoots don't grow into something else, it is going to hurt. I find it amusing that everyone is now counting on China to crarry us through this mess. The little problem is, even if we assume China can run its own race, China only accounts for some 40-50% of certain commodity demand. I had lunch with some of my friends last week. One of them is a management consultant. One of them is a tax hotshot in a large firm. They told me that internally they are all planning for a slow 2H. Btw do you notice that everyone now expects the stock market to stay above its recent low ? We may have a bit of a dip and then resume the ascent. It feels a bit too neat for me. If we assume the market is always wrong, maybe there are two distinct outcomes that will totally surprise all folks. First, a raging bull market. Second, we tank below the recent low.
Can the property market do its own thing ? We made our FIRST ever offer 2 weeks ago. We came across this property totally unexpectedly. We went to lunch in this new restaurant. We haven't looked at this suburb before. It is a bit further from the City but manageable. Anyway, after spending years looking at the Lower North Shore area, everything else outside stacks up well (big land, big house etc etc...). When we heard the price guidance from the agent. We thought it seemed low so we put in an a bid. Subsequently, the agent found another interested party. It went to auction which we did not attend. A third party came in and won. We missed the final price a fair bit. So a "good" loss I guess. Still, it is quite interesting to me that only 3 parties were interested in that property. Everyone knows this is a tight market in terms of supply, what happens if we get more houses coming onto the market ? Despite all signs of life in the property market, I still suspect we are not out of the wood yet.
I must say I am feeling quite fishy about the stock market these days. Be careful out there. If green shoots don't grow into something else, it is going to hurt. I find it amusing that everyone is now counting on China to crarry us through this mess. The little problem is, even if we assume China can run its own race, China only accounts for some 40-50% of certain commodity demand. I had lunch with some of my friends last week. One of them is a management consultant. One of them is a tax hotshot in a large firm. They told me that internally they are all planning for a slow 2H. Btw do you notice that everyone now expects the stock market to stay above its recent low ? We may have a bit of a dip and then resume the ascent. It feels a bit too neat for me. If we assume the market is always wrong, maybe there are two distinct outcomes that will totally surprise all folks. First, a raging bull market. Second, we tank below the recent low.
Can the property market do its own thing ? We made our FIRST ever offer 2 weeks ago. We came across this property totally unexpectedly. We went to lunch in this new restaurant. We haven't looked at this suburb before. It is a bit further from the City but manageable. Anyway, after spending years looking at the Lower North Shore area, everything else outside stacks up well (big land, big house etc etc...). When we heard the price guidance from the agent. We thought it seemed low so we put in an a bid. Subsequently, the agent found another interested party. It went to auction which we did not attend. A third party came in and won. We missed the final price a fair bit. So a "good" loss I guess. Still, it is quite interesting to me that only 3 parties were interested in that property. Everyone knows this is a tight market in terms of supply, what happens if we get more houses coming onto the market ? Despite all signs of life in the property market, I still suspect we are not out of the wood yet.
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