Wednesday, August 29, 2007
Short Term Yield
Monday, August 27, 2007
Prediction - believe it or not?
Just read a paper - Prediction oriented variant of financial log-periodicity and speculating about the stock market until 2010. The paper predicted that the next market top (i.e. another big crash) will come on Sep 2010 with S&P over 4000 (now 1466). The market will take up momentum after mid-2008. Let's wait and see...
In his earlier paper, there was prediction that the World market will go into a long term decline after 2025. In the author's view, the current market is mainly driven by the evolution of two bubbles, a local bubble (the credit bubble) superimposed on top of the long term bubble - demise of the dollar since 1981. This sounds reasonable.
In his earlier paper, there was prediction that the World market will go into a long term decline after 2025. In the author's view, the current market is mainly driven by the evolution of two bubbles, a local bubble (the credit bubble) superimposed on top of the long term bubble - demise of the dollar since 1981. This sounds reasonable.
Thursday, August 23, 2007
Review of the Funds on hand ...
When I am reviewing the funds I am holding, I found that 90% of the funds on hand are still having a positive return despite the recent subprime issue. This year, I got the following with negative returns:
ABM AMRO Emerging Market Bond
BlackRock Merrill Lynch World Gold
Henderson HF-Pan European Property
The emerging market bond and part of the european property funds had been sold earlier, but having them in my portfolio is still a bad decision. I had reviewed the advises I got and the reasons that convinced me to make this poor decision. When I bought the emerging market bond fund, I have listened too much from my advisor and did not went through my normal routine for reading the Annual Report and fund manager's view on market. I sold the fund right after I had finished reading it's annual report. At least, that's a good. Last year, I got similar situation for Japan fund. I have to avoid repeating this kind of mistakes in the future.
I view myself as a long-term investor. In the past, I seldom took profit unless the main investment direction changed. I tried to make an escape plan on June, but eventually nothing has been concluded. The current subprime impacts have shown me a lesson for the importance of profit taking. I have to work out a strategy for doing so.
ABM AMRO Emerging Market Bond
BlackRock Merrill Lynch World Gold
Henderson HF-Pan European Property
The emerging market bond and part of the european property funds had been sold earlier, but having them in my portfolio is still a bad decision. I had reviewed the advises I got and the reasons that convinced me to make this poor decision. When I bought the emerging market bond fund, I have listened too much from my advisor and did not went through my normal routine for reading the Annual Report and fund manager's view on market. I sold the fund right after I had finished reading it's annual report. At least, that's a good. Last year, I got similar situation for Japan fund. I have to avoid repeating this kind of mistakes in the future.
I view myself as a long-term investor. In the past, I seldom took profit unless the main investment direction changed. I tried to make an escape plan on June, but eventually nothing has been concluded. The current subprime impacts have shown me a lesson for the importance of profit taking. I have to work out a strategy for doing so.
Wednesday, August 22, 2007
Subprime
Before deciding the next move, I have to re-consider what had been happened ...
(June 07) Bear Stearns hedge funds collapse - apparently believed that collaterised debt obligations (CDOs) backed by subprime mortgages would start to increase in value over the longer term following their recent decline.
(July 19, 07) DOW record high closing above 14,000 for the 1st time.
(Aug 07) American Home Mortgage Investment Corp., announced it might be forced to liquidate assets, sending its shares down more than 90%. It filed Chapter 11 bankruptcy on August 6, 2007
(Aug 07) IKB Bank stocks lost 40 percent in Frankfurt trading in one day. IKB is believed to have an exposure of 17.5 billion euros ($24 billion) to US subprimes and could lose up to one fifth of its investments. Then SachsenLB Bank ...
(Aug 07) Worldwide market panic ...
The Rescue
(Aug 9, 07) Fed injected $30B to bail out investors over-extended in risky mortgage investments.
(Aug 10, 07) Injected $38B to bail out investors over-extended in risky mortgage investments.
(Aug 13, 07) Injected another $5B.
(Aug 14, 07) Injected another $7B to $15B.
(Aug 16, 07) The Fed added $17B.
(Aug 17, 07) Fed, the discount rate was reduced by 50 basis points from 6.25 percent to 5.75 percent, trying to halt market meltdown.
(June 07) Bear Stearns hedge funds collapse - apparently believed that collaterised debt obligations (CDOs) backed by subprime mortgages would start to increase in value over the longer term following their recent decline.
(July 19, 07) DOW record high closing above 14,000 for the 1st time.
(Aug 07) American Home Mortgage Investment Corp., announced it might be forced to liquidate assets, sending its shares down more than 90%. It filed Chapter 11 bankruptcy on August 6, 2007
(Aug 07) IKB Bank stocks lost 40 percent in Frankfurt trading in one day. IKB is believed to have an exposure of 17.5 billion euros ($24 billion) to US subprimes and could lose up to one fifth of its investments. Then SachsenLB Bank ...
(Aug 07) Worldwide market panic ...
The Rescue
(Aug 9, 07) Fed injected $30B to bail out investors over-extended in risky mortgage investments.
(Aug 10, 07) Injected $38B to bail out investors over-extended in risky mortgage investments.
(Aug 13, 07) Injected another $5B.
(Aug 14, 07) Injected another $7B to $15B.
(Aug 16, 07) The Fed added $17B.
(Aug 17, 07) Fed, the discount rate was reduced by 50 basis points from 6.25 percent to 5.75 percent, trying to halt market meltdown.
Thursday, August 16, 2007
Panic Selling - Good Time to Buy ?
The gobal market is selling. First the subprime mortage market, next the greedy hedge funds, now credit market debt and the investment banks ...
As I pointed out in April, credit disaster is modelled by the heat difussion equation. By the nature of the equation, it will spread. I believe, eventually, the credit market can absorb defaults as a business cost.
The correction can be a good time to buy so long as the the disaster does not affect the growth. But, when will be the bottom? The safe way would be - buy after the market confirm a retest of the recent low.
In this disaster, some hedge funds ran into trouble. A number of hedge funds were "surprised" to know that they had sub prime exposure in their investments. Nothing is safe.
As I pointed out in April, credit disaster is modelled by the heat difussion equation. By the nature of the equation, it will spread. I believe, eventually, the credit market can absorb defaults as a business cost.
The correction can be a good time to buy so long as the the disaster does not affect the growth. But, when will be the bottom? The safe way would be - buy after the market confirm a retest of the recent low.
In this disaster, some hedge funds ran into trouble. A number of hedge funds were "surprised" to know that they had sub prime exposure in their investments. Nothing is safe.
