Caveat Emptor

Commodity futures The difference between gold and oil is the usage of each and their storage costs. Backwardation very seldom arises in money commodities like gold or silver. This is because it costs a large amount of money to store oil, whereas gold costs next to nothing to stash somewhere as a function of its value. Instead, every barrel of oil that is extracted is done so for the purpose of consumption. The cost of storing oil on speculation or on arbitrage is just too huge to make it a profitable activity unless there were an absolute huge positive premium between near and far month contracts Commodity Futures Pricing Total return = Spot return + Roll return + Collateral return + Rebalancing return ·          The spot return is simply the price appreciation in the spot price, which is based on immediate delivery, of the commodity. The spot price is influenced by fundamental factors that are unpredictable. ·   ...

Summary of the week As the corona infections reached new heights (>1 million infected) and the stock market continue to hit new lows, a real life Circuit breaker was triggered in Singapore market. As enthusiastic speculators continue to long toilet paper and short stocks, the Federal Reserve tries to calm down the markets by printing USD faster than the toilet paper companies. I originally wanted to post this piece on 1st April as an awful April's Fool joke, but there is nothing humorous about the realities surrounding us. Portfolio decisions  I initiated a high conviction position in Ishs CSI 300 ETF after I observed the recovery on the China PMI. Although a part of me is confident that China will be the first to regain industrial momentum as the factory of the world, a nagging worry is the fact that the Chinese has a history of fudging their numbers and economic data.  As a know nothing investor whom does not understand China GAAP , and has no comparative ...

The week of falling knifes A Technical Analyst and a Fundamental Analyst are chatting about the markets in the kitchen. Accidentally one of them knocks a kitchen knife off the table landing right in the fundamental analyst’s foot!  The fundamental analyst yells at the technician, asking him why he didn’t catch the knife? “You know Technicians don’t catch falling knives!” , the technician responded.  He in turn asks the fundamental analyst why he didn’t move his foot out of the way? The Fundamental analyst responds, “ I didn’t think it could go that low”. Summary of the week The market volatility this week is unprecedented and unnerving to many whom had enjoyed close to a decade of relative peace and tranquility. Circuit breakers were triggered at stock exchanges and the fear and greed index registered fear metrics close to the 2008 GFC era. The stock market is a roller coaster ride indeed. It was all fun and chuckles when it is making its slow...

Everyone is a long term investor when the market is ascending. And a risk manager when it is correcting. Instead of treating volatility as the proxy for risk, the true definition of risk is the prospect of both danger and opportunity . This stress test is a test of conviction. If people start treating stock sales like steam sales, and stock symbols like game titles, they will be less afraid. Nonetheless, w hat has gone low can simply go lower.   This is probably one of those Warren Buffett moments. What will you do when you have deep pockets? What will you do if you aren't afraid? The Battle of Wallets Deep

 Michael Leong- Local Legend After exhausting significant part of my war chest, I was very fortunate to chance upon the book published by a Local Legend - Dr Michael Leong. It was my second time rereading the book and the experiences he shared still felt as vivid as ever.  I first heard of Dr Michael Leong on Hyom Hyom blog whereby ML won significant praise as a wise and selfless investor which is willing to teach and share about his journey and the lessons he learnt. Dr Wealth also had a short writeup on him. The forums are now defunct and I was under the impression that his teachings had been lost. What I did not realize then is that ML also published a book. I rapidly snapped up this secret manual upon sighting his name in the library shelf. His insight into investing in Singapore is profound and sometimes contradictory, rational yet contrarian and well rooted in the context of Singapore Market. ML has a remarkable mind and strong self control, being able to clear...

Bear Hunting in China Following up from my last post, I was interested to allocate my pent up warchest to capitalize on the fear in SG, HK and CN market, brought about from the Corona Virus Epidemic. Although this is not the market crash prophesied by the perpetual doomsayers, a warchest approach did come in handy for blind spots that everyone has been missing out. A statistical collation through Tencent revealed granular statistics about the nature of virus in CN. With the social backlash from China citizens for the undue censorship in China, I do not think there will be any fraud / misrepresentation in the big data collated from Tencent / China government. The risk of GIGO should be relatively limited. Caveat Emptor The below views are my own and anyone reading should conduct their due diligence Assuming ceteris paribus and the virus don't mutate to different form, the contagion effect of the virus is incredible high, and the fear of infection have probably contributed to t...

The year of the rat was greeted with the onset of an extreme infectious disease. Although the means of transmission are dissimilar to the bubonic plague / Black death of the 14th century, the fear and rumour mongering on social media in China and SG is perhaps equally contagious.  Seeing red during CNY on the stock market is not exactly an enjoyable experience although I was emotionally prepared for it. I am happy to have stockpiled my war chest to prepare for market corrections like this. Although I do not exactly rejoice on the fact that people are dying and suffering from possible loss of their loved ones, my job as a contrarian investor is to seek out undervalued opportunities in averse market sentiment.  Short term impact  Healthcare stocks  Raffles medical - solving of overcapacity issue on Chongqing and Shanghai.  IHH Healthcare, which has eight ParkwayMedical health centres in China Medtecs, a manufacturer and distributor of medical consumables, San...