Showing posts from March, 2007

Under-Reaction to Property Plays

If investors has certain biasness to over-react to certain situations like a single bad quarter, investors may also have some biasness to under-react to other situations. And recently, I discover my own biasness to under-react to a property play as I bought smaller stake in that property stock than I would buy if it is some other stock.

I do not normally buy property stocks due to my lack of understanding to value them in the long run. Or in other words, it is difficult for me to apply discounted dividends or cash-flow method to property stocks. In most local research reports, they would use a RNAV (Realized Net Asset Value, if I’m not wrong) to value property stocks. I recognize that I lack the understanding in properties to do an estimate of RNAV, so I generally do not buy property stocks until two weeks ago.

Around two weeks ago, I bought into Orchard Parade at $1.10 as I think that it may be a rare case of a property stock that I recognize as low-risk with good gains. There are two …

Market Crying Wolf (or Bear)?

As this week passed, many people judged that the market correction is finally over. The STI has recovered to 3205 as at Friday 22 Mar 2007.

I am, of course like many investors, glad that the market has recovered. In this episode, I have hopefully learnt to withstand market volatility better and not to panic when disaster strikes again.

And as I have said before, it is quite fortunate that I returned to the market much faster than I would have thought, after disposing around 50% of my holdings. Yet, I have not fully recovered from the peak before the correction. Last year, it took around four to five months from the May-June correction before my portfolio return to the peak during April 2006. Maybe this year’s recovery may come sooner or it may not come. I don’t know.

When I look at the 2006 and 2007 correction, it may seem like a correction on hindsight. Or metaphorically, it is like the market crying wolf. Yet, as the story goes, sooner or later the wolf appears but when it appears, it …

An put warrant loss, solace in Graham philosophy

On a certain day during last week, I have purchased a put warrant on STI when STI drops around 80 points. The original intention of the purchase is to hedge my portfolio. At the end of that day, I feel like a genius as my put warrants show a significant profit.

And in the next day, I was made to feel like a fool when I disposed my put warrants at a significant loss. As the US markets had recovered overnight, the STI on the following morning followed the US markets and jumped around 40-60 points. To cut the possibility of further losses as well as to remove the hedge, I dispose of my put. This experience or hedge set me back by around 800 dollars.

On further post evaluation of the put warrant incident, I figure that I am bounded to have expected losses in warrants if I am to invest or speculate in warrants. This is because I lack a strategy to derive positive expected profits in warrants. Assuming that the market is close to random and warrants are priced at a premium, my probability of …

Perhaps Too Panicky?

After a week, the market seems to have recovered with the STI at 3182. On hindsight, I may have made silly decisions to liquidate around 50% of my portfolio into cash. If I have not sold during the crash, probably my current portfolio would look better when the market recover.

At the end of last week, I have taken steps to re-build my portfolio by buying into the stocks I am still holding and a new stock holding. This somewhat relieves the pressure of underperformance when the market is or seems to be recovering. And today, I have further added on to my holdings. I’m not sure if buying now will be correct in the coming days or weeks.

It is very difficult to act on foresight and easy to evaluate on hindsight. I do not mind the heavy liquidation done last week as I would not have known if the market would continue to correct or not.

Furthermore, I do not believe in technical investing. Or to put in another way, there is no solid logical ground showing that technical investing will outperfo…